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

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If you've been stuck searching for Large Cap Growth funds, consider Fidelity Growth Discovery (FDSVX - Free Report) as a possibility. FDSVX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FDSVX 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

FDSVX finds itself in the Fidelity family, based out of Boston, MA. Fidelity Growth Discovery debuted in March of 1998. Since then, FDSVX has accumulated assets of about $1.68 billion, according to the most recently available information. The fund is currently managed by Jason Weiner who has been in charge of the fund since February of 2007.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. FDSVX has a 5-year annualized total return of 15.6% 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 20.21%, 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 FDSVX over the past three years is 10.52% compared to the category average of 10.29%. The fund's standard deviation over the past 5 years is 10.9% compared to the category average of 9.91%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. FDSVX lost 55.89% in the most recent bear market and outperformed its peer group by 6.92%. This might suggest that the fund is a better choice than its peers during a bear market.

Nevertheless, investors should also note that the fund has a 5-year beta of 0.95, which means it is hypothetically 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. The fund has produced a positive alpha over the past 5 years of 2.34, which shows 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 largely on equities that are traded in the United States.

Right now, 87.91% of this mutual fund's holdings are stocks, and these companies have an average market capitalization of $268.24 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance
With turnover at about 45%, this fund makes 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, FDSVX is a no load fund. It has an expense ratio of 0.73% compared to the category average of 1.10%. From a cost perspective, FDSVX 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

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, Fidelity Growth Discovery ( FDSVX ) looks like a good potential choice for investors right now.

Your research on the Large Cap Growth segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer 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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