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

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If you have been looking for Mutual Fund Equity Report fund category, a potential starting could be Fidelity Magellan Fund (FMAGX - Free Report) . FMAGX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FMAGX. Fidelity Magellan Fund debuted in May of 1963. Since then, FMAGX has accumulated assets of about $31 billion, according to 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

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 20.46%, and it sits in the bottom third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 24.03%, 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. Over the past three years, FMAGX's standard deviation comes in at 18.07%, compared to the category average of 17.78%. Over the past 5 years, the standard deviation of the fund is 15.62% compared to the category average of 14.62%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 0.97, so investors should note that it is hypothetically 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. With a positive alpha of 2.71, 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 mostly on equities that are traded in the United States.

As of the last filing date, the mutual fund has 77.53% of its assets in stocks, with an average market capitalization of $420.50 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Retail Trade
This fund's turnover is about 56%, so the fund managers are making more trades in a given year than the category average.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, FMAGX is a no load fund. It has an expense ratio of 0.67% compared to the category average of 1.02%. From a cost perspective, FMAGX 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 Magellan Fund ( FMAGX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.

Want even more information about FMAGX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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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