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Is Fidelity Magellan Fund (FMAGX) a Strong Mutual Fund Pick Right Now?

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Any investors hoping to find a Large Cap Growth fund might consider looking past Fidelity Magellan Fund (FMAGX - Free Report) . FMAGX carries a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FMAGX 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 FMAGX, and the company is based out of Boston, MA. The Fidelity Magellan Fund made its debut in May of 1963 and FMAGX has managed to accumulate roughly $26.44 billion in assets, as of the most recently available information. The fund is currently managed by Sammy Simnegar who has been in charge of the fund since February of 2019.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 17.51%, and it sits in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 17.15%, which places it in the bottom 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. FMAGX's standard deviation over the past three years is 18.28% compared to the category average of 17.45%. Over the past 5 years, the standard deviation of the fund is 15.03% compared to the category average of 14.4%. 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 0.96, so it is likely going to be less volatile than the market at large. 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 0.97. This means that managers in this portfolio are skilled in picking 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.

Right now, 77.95% of this mutual fund's holdings are stocks, with an average market capitalization of $330.85 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Retail Trade
Turnover is about 56%, so those in charge of the fund make more trades in a given year than the average of comparable funds.

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, FMAGX is a no load fund. It has an expense ratio of 0.78% compared to the category average of 1.02%. So, FMAGX is actually cheaper than its peers from a cost perspective.

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 Magellan Fund ( FMAGX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, Fidelity Magellan Fund ( FMAGX ) looks like a somewhat weak choice for investors right now.

For additional information on the Large Cap Growth 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 FMAGX too for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.


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