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Is Fidelity Growth Discovery (FDSVX) a Strong Mutual Fund Pick Right Now?

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Having trouble finding a Large Cap Growth fund? Fidelity Growth Discovery (FDSVX - Free Report) is a potential starting point. FDSVX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FDSVX is part of the Large Cap Growth section, and this segment boasts an array of other possible options. Large Cap Growth mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks. Companies are usually considered to be large-cap if their market capitalization is over $10 billion.

History of Fund/Manager

Fidelity is responsible for FDSVX, and the company is based out of Boston, MA. Since Fidelity Growth Discovery made its debut in March of 1998, FDSVX has garnered more than $1.59 billion in assets. The fund's current manager, Jason Weiner, has been in charge of the fund since February of 2007.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 9.91%, and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 11.55%, 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. Over the past three years, FDSVX's standard deviation comes in at 15.45%, compared to the category average of 12.21%. The fund's standard deviation over the past 5 years is 14.13% compared to the category average of 11.83%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In FDSVX's case, the fund lost 55.89% in the most recent bear market and underperformed its peer group by 7%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.

Investors should note that the fund has a 5-year beta of 0.96, so it is likely going to be less 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 positive alpha over the past 5 years of 3.33, which shows that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Exploring 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.

The mutual fund currently has 91.78% of its holdings in stocks, and these companies have an average market capitalization of $379.83 billion. Turnover is 45%, which means, on average, the fund makes fewer trades than its comparable peers.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, FDSVX is a no load fund. It has an expense ratio of 0.78% compared to the category average of 1.06%. Looking at the fund from a cost perspective, FDSVX is actually cheaper than its peers.

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 Growth Discovery ( FDSVX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

This could just be the start of your research on FDSVXin the Large Cap Growth category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank 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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