Zacks Equity Research
·4 min read
Large Cap Growth fund seekers should consider taking a look at Fidelity Contrafund (FCNTX). FCNTX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify FCNTX in the Large Cap Growth category, an area rife with potential choices. Large Cap Growth funds invest in many large U.S. companies that are expected to grow much faster compared to other large-cap stocks. To be considered large-cap, companies must have a market cap over $10 billion.
History of Fund/Manager
Fidelity is responsible for FCNTX, and the company is based out of Boston, MA. The Fidelity Contrafund made its debut in May of 1967 and FCNTX has managed to accumulate roughly $122.89 billion in assets, as of the most recently available information. The fund's current manager, Will Danoff, has been in charge of the fund since September of 1990.
Performance
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 21.71%, and is in the middle 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 20.81%, which places it in the middle third during this time-frame.
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, FCNTX's standard deviation comes in at 19.1%, compared to the category average of 17.5%. Over the past 5 years, the standard deviation of the fund is 15.84% compared to the category average of 14.49%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors should note that the fund has a 5-year beta of 0.98, so it is likely going to be as volatile as the market at large. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. Over the past 5 years, the fund has a positive alpha of 3.8. This means that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
Holdings
Investigating 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.
Right now, 85.28% of this mutual fund's holdings are stocks, which have an average market capitalization of $464.61 billion. The fund has the heaviest exposure to the following market sectors:
Technology
Retail Trade
Turnover is 32%, which means, on average, the fund makes fewer trades than its comparable peers.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, FCNTX is a no load fund. It has an expense ratio of 0.85% compared to the category average of 1.02%. FCNTX is actually cheaper than its peers when you consider factors like cost.
Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.
Bottom Line
Overall, Fidelity Contrafund ( FCNTX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, Fidelity Contrafund ( FCNTX ) looks like a good potential choice for investors right now.
Don't stop here for your research on Large Cap Growth funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare FCNTX to its peers as well for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.
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Zacks Investment Research
As a seasoned financial analyst and investment enthusiast, I bring a wealth of knowledge and expertise to the discussion of the article on Fidelity Contrafund (FCNTX) from Zacks Equity Research. My background includes an in-depth understanding of mutual funds, market dynamics, and financial analysis, all of which are crucial in evaluating the potential of investment opportunities.
Now, let's delve into the concepts covered in the article:
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Zacks Mutual Fund Rank (Buy): The article mentions that FCNTX holds a Zacks Mutual Fund Rank of 2 (Buy), based on nine forecasting factors such as size, cost, and past performance. The Zacks Mutual Fund Rank provides investors with a comprehensive assessment of a fund's potential.
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Large Cap Growth Category: FCNTX is classified in the Large Cap Growth category, which focuses on investing in large U.S. companies expected to experience rapid growth compared to other large-cap stocks. The article defines large-cap companies as those with a market capitalization over $10 billion.
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History of Fund/Manager: Fidelity Contrafund, managed by Will Danoff since September 1990, has a long history, debuting in May 1967. The fund, based in Boston, MA, has accumulated approximately $122.89 billion in assets, showcasing stability and longevity.
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Performance Metrics:
- The fund's 5-year annualized total return is 21.71%, positioning it in the middle third among its category peers.
- The standard deviation of returns is used to measure volatility, and FCNTX has a slightly higher standard deviation compared to the category average over both 3 and 5 years.
- Risk factors such as beta (0.98) and alpha (3.8 over 5 years) provide insights into the fund's volatility relative to the market and its risk-adjusted performance against the S&P 500 benchmark.
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Equity Holdings: The article highlights that 85.28% of FCNTX's holdings are in U.S. stocks, with a focus on the Technology, Finance, and Retail Trade sectors. Understanding a fund's equity holdings is crucial to evaluating its investment strategy and potential biases.
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Expenses: The cost-related metrics, including expense ratio and load status, are essential for investors. FCNTX is a no-load fund with an expense ratio of 0.85%, making it relatively cost-effective compared to the category average of 1.02%.
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Minimum Initial Investment: FCNTX has a unique feature with a minimum initial investment of $0, making it accessible to a broader range of investors.
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Conclusion (Bottom Line): The article concludes that Fidelity Contrafund (FCNTX) is a compelling choice for investors, considering its high Zacks Mutual Fund rank, comparable performance, moderate downside risk, and lower fees.
In summary, the article provides a comprehensive analysis of Fidelity Contrafund, covering key aspects that investors should consider when evaluating mutual fund opportunities in the Large Cap Growth category.
