Canada Markets closed

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

Zacks Equity Research
Tilly's (TLYS) closed the most recent trading day at $16.18, moving -0.98% from the previous trading session.

On the lookout for a Large Cap Growth fund? Starting with Fidelity Contrafund K FCNKX is one possibility. FCNKX holds a Zacks Mutual Fund Rank of 2 (Buy), 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. The Fidelity Contrafund K made its debut in May of 2008 and FCNKX has managed to accumulate roughly $32.06 billion in assets, as of the most recently available information. The fund is currently managed by Will Danoff who has been in charge of the fund since May of 2008.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. FCNKX has a 5-year annualized total return of 13.63% 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 13.06%, 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. Compared to the category average of 10.29%, the standard deviation of FCNKX over the past three years is 11.16%. Over the past 5 years, the standard deviation of the fund is 10.85% compared to the category average of 10%. 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, with a 5-year beta of 0.94, the fund is likely to be less volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. FCNKX has generated a positive alpha over the past five years of 1.16, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Investigating 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 primarily on equities that are traded in the United States.

As of the last filing date, the mutual fund has 98.42% of its assets in stocks, with an average market capitalization of $260.26 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance

This fund's turnover is about 29%, 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, FCNKX is a no load fund. It has an expense ratio of 0.65% compared to the category average of 1.11%. FCNKX is actually cheaper than its peers when you consider factors like cost.

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 has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

This could just be the start of your research on FCNKXin the Large Cap Growth category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.


View All Zacks #1 Ranked Mutual Funds
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 (FCNKX): Fund Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research