Is Fidelity OTC Portfolio K (FOCKX) a Strong Mutual Fund Pick Right Now?

If you have been looking for Large Cap Growth funds, a place to start could be Fidelity OTC Portfolio K (FOCKX). FOCKX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

We classify FOCKX in the Large Cap Growth category, an area rife with potential choices. Large Cap Growth funds invest in many large U.S. companies that are expected to grow much faster compared to other large-cap stocks. To be considered large-cap, companies must have a market cap over $10 billion.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FOCKX. Fidelity OTC Portfolio K debuted in May of 2008. Since then, FOCKX has accumulated assets of about $9.50 billion, according to the most recently available information. Christopher Lin is the fund's current manager and has held that role since September of 2017.

Performance

Of course, investors look for strong performance in funds. FOCKX has a 5-year annualized total return of 15.28%, and is in the top 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 30.1%, which places it in the top third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

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 FOCKX over the past three years is 15.04% compared to the category average of 13.01%. Looking at the past 5 years, the fund's standard deviation is 18.38% compared to the category average of 14.78%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. FOCKX has a 5-year beta of 1.11, which means it is likely to be more volatile than the market average. 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. Over the past 5 years, the fund has a negative alpha of -0.48. This means that managers in this portfolio find it difficult to pick 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 mostly on equities that are traded in the United States.

Right now, 79.52% of this mutual fund's holdings are stocks, with an average market capitalization of $862.50 billion. The fund has the heaviest exposure to the following market sectors:

• Technology

This fund's turnover is about 53%, so the fund managers are making fewer trades than the average comparable fund.

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, FOCKX is a no load fund and it has an expense ratio of 0.65%.

Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.

Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.

Bottom Line

This puts this fund from Fidelity in the top 20% of all mutual funds we have a rank on right now. As a result, this is likely an excellent choice for investors seeking an option in the Large Cap Growth category.

For additional information on the Large Cap Growth 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 FOCKX too for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.

5 Stocks Set to Double

Each was handpicked by a Zacks expert as the favorite stock to gain +100% or more in the months ahead. They include

Stock #1: A Disruptive Force with Notable Growth and Resilience

Stock #2: Bullish Signs Signaling to Buy the Dip

Stock #3: One of the Most Compelling Investments in the Market

Stock #4: Leader In a Red-Hot Industry Poised for Growth

Stock #5: Modern Omni-Channel Platform Coiled to Spring

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. While not all picks can be winners, previous recommendations have soared +171%, +209% and +232%.

See Our Newest 5 Stocks Set to Double Picks >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Get Your Free (FOCKX): Fund Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research