Growth stock funds have the short-term momentum now. Fidelity funds are leaders in the high-quality, low-cost, actively-managed arena of mutual funds.
Growth funds are not just smart short-term plays for the late phase of the business cycle. They can also be solid core holdings for a diversified portfolio. Thus far in 2015, the average large-growth stock fund is up 3.5%, whereas the S&P 500 index is just below 1%. Going out a full decade, the 10-year annualized return of the average large-growth fund is 9%, edging out the S&P 500 at 8.5%.
And that’s just the average. Those invested in the outperformers of the group — including a few of these best-in-class Fidelity funds — can expect even more.
Best Fidelity Funds for Growth: Fidelity Growth Company (FDGRX)
Expenses: 0.82%, or $82 for every $10,000 invested
Fidelity Growth Company (MUTF:FDGRX) has earned five stars from Morningstar and sits high in the ranks of large growth mutual funds.
FDGRX is one of the best-performing large-cap growth funds of the past decade. Longtime manager Steve Wymer has led Growth Company to an incredible record during his tenure. The 10-year annualized return of 12% beats 98% of all large-cap growth funds, and it easily eclipses the 8.1% return on the S&P 500 for the same period. Even the 15-year returns beat the S&P 500, as well as nearly 80% of all large growth funds.
Wymer’s management style is primarily of a buy-and-hold nature, as evidenced by the low 12% turnover, which makes his long-term performance that much more impressive. This low churn rate keeps costs low and further supports long-term performance.
FDGRX requires a minimum investment of just $2,500, and the 0.82% expense ratio is below average.
Best Fidelity Funds for Growth: Fidelity Capital Appreciation Fund (FDCAX)
The Fidelity Capital Appreciation Fund (MUTF:FDCAX) is another member of the Fidelity funds lineup that is well-managed and boasts an outstanding track record.
Lead manager J. Fergus Shiel has been at the helm of Fidelity Capital Appreciation for nearly a decade, and his management style has a go-anywhere, high turnover flair that has led to top-notch performance in the past decade.
Performance ranks across the board are above average, capped by the 10-year performance rank of 27, placing FDCAX ahead of more than 70% of all large growth funds since 2005.
Unlike most other growth funds, the Fidelity Capital Appreciation portfolio is under-weight in the technology sector but overweight in healthcare , financials and consumer cyclical stocks. Top holdings include Gilead Sciences, Inc. (NASDAQ:GILD), Ameriprise Financial, Inc. (NYSE:AMP) and Starbucks Corporation (NASDAQ:SBUX).
Minimum initial investment is $2,500.
Best Fidelity Funds for Growth: Fidelity Select Technology Portfolio (FSPTX)
Fidelity Select Technology Portfolio (MUTF:FSPTX) isn’t just among the better Fidelity funds out there — it’s also on the overall short list of tech sector funds.
In a crowded field of tech funds, Fidelity Select Technology is beating 94% of category peers with a year-to-date gain of just less than 6%. Fund manager Charlie Chai has been at the helm for eight years, and has put up an impressive performance record, with one-, three- and five-year returns all comfortably above category averages.
The technology sector holdings in the portfolio are predominately large-cap U.S. stocks, at about 80% allocation, with the remainder in foreign companies. Top holdings include Apple, Facebook and Google Inc (NASDAQ:GOOG, NASDAQ:GOOGL).
And like the rest of these funds, FSPTX requires just a $2,500 minimum investment.
As of this writing, Kent Thune did not hold a position in any of the aforementioned securities. Under no circumstances does this information represent a recommendation to buy or sell securities.