Three Great Mutual Funds for 2013
If you're going to hand-pick a group of funds likely to find continued success in 2013, it would look quite a bit like this trio.
My annual portfolio holdings review is meant to ensure that we know where and how we are putting our foot forward. While the domestic and global markets marched higher in January, with riskier assets leading the charge, I'm more focused on managing the possible risks in relation to what I view as the probability for rewards.
I continue to be willing to yield a few percentage points of return versus a generic benchmark like the S&P 500 (INDEXSP:.INX) if it means not losing a few percentage points more than that benchmark.
I am bullish about our long-term prospects based on the success of our risk-adjusted investment discipline, and even now our allocations are net bullish, especially compared to the hue and cry of the double dippers. But that bullishness is made possible by the knowledge that we have buffers in place which act as a safety net should the stock markets stumble or fall.
Low-Priced Stock (MUTF:FLPSX) is still inimitable, still head and shoulders above even the best crop of giants you can find in the space. Lead manager Joel Tillinghast is about as far a cry from leveraged stocks as you can get.
Tillinghast invests in stocks priced $35 or less, which leads to investments in mostly small- and mid-cap companies but can, and has, and will continue to buy blue chips at rice grain prices when corrections sweep in.
He has also always been among the more globally oriented managers at Fidelity. Sometimes that smarts, but more often he outsmarts the conventional wisdom of which regions to avoid by picking stocks with an upside accent. Foreign investments make up 36.3% of the holdings. The top three sectors are consumer discretionary (26.7%), information technology (18.6%), and health care (10%).
There are a lot of funds out there that sound like they're buying the big boys, but few actually do just that. Not so Mega Cap Stock (MUTF:FGRTX). Manager Matthew Fruhan invests more than 70% of the fund in companies with mega market capitalizations.
You could contrast this with Vanguard Dividend Growth (MUTF:VDIGX), which invests about 40% of its assets in mega cap companies. Fruhan can reach across the pond, but prefers US battleships. Foreign investments make up 7.2% of the holdings. The top three sectors are information technology (19.3%), financials (18.3%), and health care (12.8%).
Eddie Yoon manages Select Healthcare (MUTF:FSPHX) and invests in companies involved in the design, production, or sale of health-care products and services, including, but not limited to: pharmaceutical, diagnostic, administrative, medical supply, and biotechnology.
Foreign investments make up 14.6% of the holdings. The top three sectors are health care (95%), consumer staples (2.8%), and information technology (1%).
Editor's Note: This article was written by Jim Lowell of Fidelity Investor.
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