Fidelity Investments is one of the best fund families for aggressive investors. Why? Because they offer a wide range of low-cost, no-load growth stock funds that are well-managed. But before I present you with the list of the best Fidelity funds for aggressive investors, let’s define what it means to be aggressive and how this handful of funds made my list.
What It Means to be ‘Aggressive’
In the world of investing, the meaning of aggressive is somewhat fluid and abstract, which is to say that it can mean 10 different things to 10 different people. However, most investors can agree that aggressive mutual funds and their respective managers will generally do these things: seek rapid growth, buy stocks with high price/earnings, and accept high levels of risk relative to the broad market in exchange for the potential of high relative returns.
Therefore, aggressive investors are prioritizing growth above other investing objectives, such as income or preservation. They may be willing to take on the associated market risk because they have long-term time horizons, such as 10 years or more, or they may have a natural high tolerance for risk (or both).
How I Selected the Best Fidelity Funds for Aggressive Investors
To make my list of the best Fidelity funds for aggressive investors, the first and most obvious criterion is to be a Fidelity fund! For the first two funds on the list, I selected Fidelity funds that specifically state their portfolio objective to be “aggressive growth.” However, just saying you’re aggressive doesn’t actually mean you’re aggressive. Therefore, to dig a little deeper in the first few selections, I included funds with inception dates prior to 2007 and with managers that have been at the helm for at least 7 years.
Past performance is no guarantee of future results and a lack of history does not always suggest lack of future potential. But to have some assurance we are buying an aggressive fund, I looked at past performance for evidence of aggressive behavior. For example, we need to know how the fund performed during a period, such as 2007, when funds investing in growth stocks performed better than the broad market indices.
To round out my list I added two more funds in the categories of Emerging Markets and Technology, which are aggressive by nature. In these cases, I did not consider manager tenure as a selection criteria.
Now check out the list…
Best Fidelity Funds for Aggressive Investors – Fidelity Capital Appreciation (FDCAX)
This is one of the few Fidelity funds that explicitly states its investment objective as “aggressive growth,” but that’s not the only reason it made my “best of” list. The fund manager, J. Fergus Shiel, has been at the helm of Fidelity Capital Appreciation (FDCAX) since 2005. Therefore, we have sufficient history to look for evidence the fund is true to its stripes.
In 2007, FDCAX returned 6.9%, whereas the S&P 500 Index gained 5.5%. This is not an eye-popping lead over the broad market but its significant testimony of its growth style. The fund holds primarily large-cap growth stocks, but it also holds mid-cap stocks, adding to its aggressive nature.
Best Fidelity Funds for Aggressive Investors – Fidelity New Millennium (FMILX)
We begin to turn up the aggression now with Fidelity New Millennium (FMILX). John D. Roth has been managing the portfolio since 2006 and trounced the S&P 500 Index in 2007 with a gain of 16.5% versus 5.5% for the index. Even more impressive, the 5-year annualized return, as of July 7, 2014, is 22.5%, compared to 20% for the S&P 500.
Like many funds with aggressive growth objectives, FMILX holds mostly large-cap stocks but adds mid-cap and small-cap holdings for the added oomph in return needed to beat the broad market indices.
Best Fidelity Funds for Aggressive Investors – Fidelity Emerging Markets (FEMKX)
If you want to build a truly aggressive portfolio of mutual funds, and you’re not afraid of extreme volatility, you’ll want to consider emerging markets and Fidelity Emerging Markets (FEMKX) is among the best in this category. Here’s a taste of what you might expect during extreme periods:
In 2007, Fidelity Emerging Markets returned 45.1%, compared to the S&P 500 Index, which gained 5.5%. However, in 2008, when the bear market and global financial crisis were in full swing, FEMKX dropped -60.8%, whereas the S&P 500 declined -37%. Adding to the volatility, 2009 saw a huge bounce of 76% for Fidelity Emerging Markets, compared to 26.5% for the S&P 500.
For something more recent, and an apples-to-apples comparison, in 2013, FEMKX gained 3.9%, which is better than 80% of all other funds in the emerging markets category.
Best Fidelity Funds for Aggressive Investors – Fidelity Select Technology (FSPTX)
Technology, like emerging markets, is also a market segment that is synonymous with the word aggressive, and Fidelity Select Technology (FSPTX) is a standout. As of the most recent reporting in May 2014, the FSPTX portfolio consisted of 91% technology stocks, including top holdings like Apple (AAPL), Google (GOOG) and Facebook (FB).
To juice returns, Fidelity Select Technology consists of 25% mid-cap stocks and 15% small-cap stocks. Past performance also justifies the fund’s aggressive nature with a 5-year annualized return of 22%, beating 86% of funds in the technology sector category.
As of this writing, Kent Thune did not hold a position in any of the aforementioned securities.
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