Is Fidelity Dividend Growth Fund (FDGFX) a Strong Mutual Fund Pick Right Now?
There are plenty of choices in the Large Cap Blend category, but where should you start your research? Well, one fund that might be worth investigating is Fidelity Dividend Growth Fund (FDGFX). FDGFX has a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.
FDGFX is part of the Large Cap Blend section, an area that boasts an array of many possible options. Large Cap Blend mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a ‘buy and hold’ mindset. Blended funds mix large, established companies into their holdings, which gives investors exposure to both value and growth at the same time.
FDGFX finds itself in the Fidelity family, based out of Boston, MA. Since Fidelity Dividend Growth Fund made its debut in April of 1993, FDGFX has garnered more than $7.83 billion in assets. The fund’s current manager, Zachary Turner, has been in charge of the fund since July of 2020.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 18.48%, and is in the top third among its category peers. If you’re interested in shorter time frames, do not dismiss looking at the fund’s 3-year annualized total return of 24.63%, which places it in the top third during this time-frame.
It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.
When looking at a fund’s performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. FDGFX’s standard deviation over the past three years is 13.55% compared to the category average of 12.93%. The standard deviation of the fund over the past 5 years is 15.53% compared to the category average of 13.37%. This makes the fund more volatile than its peers over the past half-decade.
Investors should not forget about beta, an important way to measure a mutual fund’s risk compared to the market as a whole. FDGFX has a 5-year beta of 0.94, which means it is likely to be less volatile than the market average. Because alpha represents a portfolio’s performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. Over the past 5 years, the fund has a positive alpha of 2.53. This means that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
Examining the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is largely on equities that are traded in the United States.
Currently, this mutual fund is holding 77.53% in stocks, and these companies have an average market capitalization of $555.36 billion. The fund has the heaviest exposure to the following market sectors:
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Technology
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Finance
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Industrial Cyclical
With turnover at about 81%, this fund is making fewer trades than comparable funds.
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, FDGFX is a no load fund. It has an expense ratio of 0.67% compared to the category average of 0.91%. So, FDGFX is actually cheaper than its peers from a cost perspective.
This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Overall, Fidelity Dividend Growth Fund ( FDGFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Fidelity Dividend Growth Fund ( FDGFX ) looks like a good potential choice for investors right now.
For additional information on the Large Cap Blend area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into FDGFX too for additional information. Zacks provides a full suite of tools to help you analyze your portfolio – both funds and stocks – in the most efficient way possible.
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This article originally published on Zacks Investment Research (zacks.com).