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Is Fidelity Contrafund K (FCNKX) a Strong Mutual Fund Pick Right Now?

Is (PSEC) Outperforming Other Finance Stocks This Year?

If you have been looking for Large Cap Growth fund category, a potential starting could be Fidelity Contrafund K (FCNKX). FCNKX possesses a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FCNKX is part of the Large Cap Growth section, and this segment boasts an array of other possible options. Large Cap Growth mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks. Companies are usually considered to be large-cap if their market capitalization is over $10 billion.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FCNKX. Fidelity Contrafund K made its debut in May of 2008, and since then, FCNKX has accumulated about $33.24 billion in assets, per the most up-to-date date available. Will Danoff is the fund's current manager and has held that role since May of 2008.

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Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 14.07%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 19.4%, which places it in the top third during this time-frame.

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 FCNKX over the past three years is 10.27% compared to the category average of 10.29%. Over the past 5 years, the standard deviation of the fund is 10.57% compared to the category average of 9.91%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment.

Nevertheless, investors should also note that the fund has a 5-year beta of 0.94, which means it is hypothetically less volatile than the market at large. 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. FCNKX has generated a positive alpha over the past five years of 1.06, demonstrating that managers in this portfolio are skilled in picking 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 largely on equities that are traded in the United States.

Right now, 85.63% of this mutual fund's holdings are stocks, and these companies have an average market capitalization of $285.58 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology

  2. Finance

With turnover at about 34%, this fund makes fewer trades than the average comparable fund.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, FCNKX is a no load fund. It has an expense ratio of 0.76% compared to the category average of 1.10%. So, FCNKX is actually cheaper than its peers from a cost perspective.

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

Bottom Line

Overall, Fidelity Contrafund K ( FCNKX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Fidelity Contrafund K ( FCNKX ) looks like a somewhat average choice for investors right now.

Don't stop here for your research on Large Cap Growth funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare FCNKX to its peers as well for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.


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