Is Fidelity Equity Dividend Income (FEQTX) a Strong Mutual Fund Pick Right Now?

Large Cap Value fund seekers should consider taking a look at Fidelity Equity Dividend Income (FEQTX). FEQTX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

FEQTX is one of many Large Cap Value mutual funds to choose from. These funds invest in equities with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value. This strategy can often produce low P/E ratios and high dividend yields; growth levels; however, growth levels are oftentimes cut back. These funds’high growth opportunities are slowed even more since large-cap stocks are usually in more stable industries with low to moderate growth prospects. Thus, investors interested in a stable income stream fund Large Cap Value funds very appealing.

Fidelity is based in Boston, MA, and is the manager of FEQTX. Fidelity Equity Dividend Income made its debut in August of 1990, and since then, FEQTX has accumulated about $5.20 billion in assets, per the most up-to-date date available. John Sheehy is the fund’s current manager and has held that role since April of 2017.

Obviously, what investors are looking for in these funds is strong performance relative to their peers. FEQTX has a 5-year annualized total return of 13.36% and is in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 7.77%, which places it in the middle 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. Over the past three years, FEQTX’s standard deviation comes in at 15.3%, compared to the category average of 15.26%. The fund’s standard deviation over the past 5 years is 15.1% compared to the category average of 16.62%. This makes the fund less 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. FEQTX has a 5-year beta of 0.77, 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. FEQTX has generated a positive alpha over the past five years of 0.86, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.