3 of the Best Actively Managed Fidelity Funds

The Fidelity funds lineup has something to offer all kinds of investors. Fidelity has some of the cheapest index funds and a large supply of low-cost actively-managed funds that cover a wide range of market segments and sectors.

Fidelity mutual fundsJust take a look at some of these stats on Fidelity funds:

  • 65 years of experience managing money.
  • More than $2 trillion in managed assets.
  • More than 200 mutual funds, 100 of which are 4- and 5-star Morningstar rated funds.
  • 400 research professionals in offices around the world.
  • Legendary fund managers from both past and present, including Peter Lynch, Will Danoff, and Steve Wymer.

A 600-word story on Fidelity funds wouldn’t do justice to their lineup of mutual funds but we’ll get you started with three of their best actively-managed funds here.

Best Actively-Managed Fidelity Funds: Fidelity Contrafund (FCNTX)

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Expenses:
0.64%
Minimum Initial Investment: $2,500

In terms of history and outstanding long-term performance, Fidelity Contrafund (FCNTX) definitely deserves a spot in the top three actively-managed Fidelity funds.

FCNTX opened to investors in May of 1967, and the current fund manager, Will Danoff, has been at the helm since September of 1990. With 25 years of history under his belt, Danoff is experienced and has been through many market cycles, coming out ahead in the long run.

It also doesn’t hurt that Fidelity’s analyst team is known in the mutual fund industry as one of the best. Investors may not find better management for an expense ratio as low as 0.64%.

Top holdings include stalwarts like Berkshire Hathaway (BRK.A, BRK.B), Apple (AAPL) and Disney (DIS).

In the short-term, Contrafund is having a strong 2015, with a year-to-date gain of 7.7%, which is triple that of the S&P 500 Index. Long-term performance also looks outstanding. The 10-year annualized return for FCNTX is 9.7% and the annualized return for the life of the fund is 12.5%.

With Danoff at the helm, market leadership for Contrafund should continue for years to come.

Best Actively-Managed Fidelity Funds: Fidelity Select Biotechnology (FBIOX)

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Expenses:
0.74%
Minimum Initial Investment: $2,500

If the combination of high absolute returns and complete dominance of category peers is the primary criteria of top Fidelity funds, Fidelity Select Biotechnology (FBIOX) wins the prize.

Although even the average healthcare sector fund has performed well compared to the broad market in the past decade or so, FBIOX has been consistently at the top of those already high performance numbers.

I’m not aware of any other fund that ranks in top percentile for the year-to-date, 1-, 3-, 5-, and 10-year returns in any category of mutual fund. Put differently, FBIOX has beat 99% of all health care funds for the past decade.

The 10-year annualized return is an astonishing 19%. Based upon the “rule of 72,” an investor would double their money in less than four years on that return.

Even more rare in the mutual fund universe is that the manager, Rajiv Kaul, has been at the helm of FBIOX since October of 2005, which gives him almost 100% credit for that amazing 10-year run.

If you want a glimpse at the portfolio, the top holdings are Gilead Sciences (GILD), Biogen (BIIB) and Alexion Pharmaceuticals (ALXN).

Best Actively-Managed Fidelity Funds: Fidelity Capital & Income (FAGIX)

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Expenses:
0.72%
Minimum Initial Investment: $2,500

Here we find another winner among Fidelity funds, with a remarkable long-term run headed by a single manager: Fidelity Capital & Income (FAGIX).

Lead manager Mark Notkin has been at the helm of Capital & Income since July of 2003, giving him more than 12 years of experience. During his tenure, as measured by the 10-year annualized return of 8.5%, Notkin has led the Capital & Income fund to a top percentile rank for performance, outperforming 99% of the competition.

With that said, the FAGIX portfolio does hold stocks (recently at 20% of assets), which gives the fund an edge against the majority of other funds in its category of high-yield bond. But the asset allocation is part of its strength and attraction.

The current 30-day SEC yield for the fund is an impressive 3.97%.

Prospective investors need only be cautioned that the strong gains and high yields can create stock-like declines in value. However, the Capital & Income fund can be a fine addition to the fixed-income portion of a diversified portfolio.

As of this writing, Kent Thune did not personally hold a position in any of the aforementioned securities. However some of his clients hold FCNTX. His No. 1 holding is his privately held investment advisory firm in Hilton Head Island, SC. Under no circumstances does this information represent a recommendation to buy or sell securities.

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