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Is Fidelity Capital Appreciation (FDCAX) a Strong Mutual Fund Pick Right Now?

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Looking for a Large Cap Growth fund? You may want to consider Fidelity Capital Appreciation (FDCAX - Free Report) as a possible option. The fund does not have a Zacks Mutual Fund Rank, though we have been able to explore other metrics like performance, volatility, and cost.

Objective

FDCAX is classified in the Large Cap Growth segment by Zacks, an area full of possibilities. Companies are usually considered to be large-cap if their stock market valuation is more than $10 billion. Large Cap Growth mutual funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers.

History of Fund/Manager

FDCAX finds itself in the Fidelity family, based out of Boston, MA. Fidelity Capital Appreciation debuted in November of 1986. Since then, FDCAX has accumulated assets of about $4.82 billion, according to the most recently available information. A team of investment professionals is the fund's current manager.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. FDCAX has a 5-year annualized total return of 10.47% 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 13.55%, which places it in the top 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. The standard deviation of FDCAX over the past three years is 12.44% compared to the category average of 8.24%. Over the past 5 years, the standard deviation of the fund is 12.66% compared to the category average of 9.08%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In FDCAX's case, the fund lost 55.18% in the most recent bear market and underperformed comparable funds by 9.45%. This could mean that the fund is a worse choice than comparable funds during a bear market.

Even still, the fund has a 5-year beta of 1.05, so investors should note that it is hypothetically more volatile than 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. The fund has produced a negative alpha over the past 5 years of -1.35, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

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 primarily on equities that are traded in the United States.

This fund is currently holding about 89.09% stock in stocks, which have an average market capitalization of $172.17 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance
  3. Health
This fund's turnover is about 101%, so the fund managers are making more trades per year than the comparable average.

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, FDCAX is a no load fund. It has an expense ratio of 0.53% compared to the category average of 0.76%. From a cost perspective, FDCAX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.

Bottom Line

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 FDCAX to its peers as well 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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