Any investors hoping to find a Large Cap Value fund could think about starting with Fidelity Equity Dividend Income (FEQTX - Free Report) . FEQTX has a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
FEQTX is classified in the Large Cap Value segment by Zacks, which is an area full of possibilities. Investors interested in a stable income stream fund these mutual funds very appealing because they have a unique investing strategy. Large Cap Value funds invest in stocks with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value. This tactic often leads to low P/E ratios and high dividend yields; however, these funds'high growth opportunity are often slowed, as large-cap securities are generally in stable industries with low to moderate growth prospects.
History of Fund/Manager
Fidelity is based in Boston, MA, and is the manager of FEQTX. Since Fidelity Equity Dividend Income made its debut in August of 1990, FEQTX has garnered more than $4.88 billion in assets. The fund is currently managed by John Sheehy who has been in charge of the fund since April of 2017.
Investors naturally seek funds with strong performance. FEQTX has a 5-year annualized total return of 7.96% and is in the middle third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 9.9%, which places it in the middle 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 FEQTX over the past three years is 10.71% compared to the category average of 9.93%. The standard deviation of the fund over the past 5 years is 10.85% compared to the category average of 10.29%. This makes the fund more volatile than its peers over the past half-decade.
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In the most recent bear market, FEQTX lost 56.06% and underperformed comparable funds by 5.42%. This could mean that the fund is a worse choice than comparable funds during a bear market.
Even still, the fund has a 5-year beta of 0.93, so investors should note that 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 negative alpha over the past 5 years of -2.61, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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.
The mutual fund currently has 95.74% of its holdings in stocks, which have an average market capitalization of $123.14 billion. The fund has the heaviest exposure to the following market sectors:
- Industrial Cyclical
With turnover at about 56%, this fund is making more trades per year than the comparable average.
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, FEQTX is a no load fund. It has an expense ratio of 0.60% compared to the category average of 0.99%. So, FEQTX 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.
Overall, Fidelity Equity Dividend Income ( FEQTX ) has a high Zacks Mutual Fund rank, similar performance, average downside risk, and lower fees compared to its peers.
For additional information on the Large Cap Value 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 FEQTX too for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.