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Is Fidelity Large Cap Core Enhance Index (FLCEX) a Strong Mutual Fund Pick Right Now?

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If investors are looking at the Large Cap Blend fund category, Fidelity Large Cap Core Enhance Index (FLCEX - Free Report) could be a potential option. FLCEX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FLCEX is part of the Large Cap Blend section, an area that boasts an array of many possible options. Large Cap Blend mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a "buy and hold" mindset. Blended funds mix large, established companies into their holdings, which gives investors exposure to both value and growth at the same time.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FLCEX. Since Fidelity Large Cap Core Enhance Index made its debut in May of 2007, FLCEX has garnered more than $639.18 million in assets. The fund's current manager is a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. FLCEX has a 5-year annualized total return of 13.07% and is in the top 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 9.93%, 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. Compared to the category average of 10.65%, the standard deviation of FLCEX over the past three years is 10.25%. The standard deviation of the fund over the past 5 years is 9.95% compared to the category average of 10.39%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. FLCEX lost 49.29% in the most recent bear market and outperformed its peer group by 0.43%. This could mean that the fund is a better choice than comparable funds during a bear market.

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. FLCEX has a 5-year beta of 1, which means it is likely to be as volatile as the market average. 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. FLCEX's 5-year performance has produced a negative alpha of -0.15, which means managers in this portfolio find it difficult to pick 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 principally on equities that are traded in the United States.

As of the last filing date, the mutual fund has 91.73% of its assets in stocks, and these companies have an average market capitalization of $209.77 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance
  3. Non-Durable

With turnover at about 88%, this fund makes 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, FLCEX is a no load fund. It has an expense ratio of 0.40% compared to the category average of 1.00%. From a cost perspective, FLCEX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment has no minimum amount.

Bottom Line

Overall, Fidelity Large Cap Core Enhance Index 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.

Want even more information about FLCEX? 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. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.




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