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I’ve been in the mutual funds game for about 25 years now, taking a hard look at fund performance and conducting numerous interviews with the pros over at my favorite fund family, Fidelity Investments.
I’ve drawn on this knowledge to help my Fidelity Investor subscribers build a model Fidelity portfolio that has beaten the market by 118% over the last 17 years. But, basically, my advice all boils down to this: Don’t buy the fund, buy the manager.
It would be foolish to hand over your portfolio to a random stranger and put him/her in charge of your retirement, right? I’m sure you’d agree…but that’s exactly what millions of investors are doing, by stocking their 401(k) or IRA with funds without doing their homework first.
After all, you’re relying on the fund manager to bolster your retirement, so it pays to have a good sense of who they are, what their approach is, and whether it’s the right time to own their fund.
About Jim Lowell
Jim’s subscribers know they are in good hands. The fund selections they get directly from Jim double, and in many cases triple their returns. His strategies for investment income have boosted members’ annual income two-fold. Jim’s a bona-fide Fidelity genius.
He’s also a real-life Fidelity fanatic. He was born in Boston and he still lives there. He holds Master’s degrees from both Harvard University and Trinity College. He used to work at Fidelity, where he helped launch Fidelity’s most prominent publications, Fidelity Focus and Investment Vision, which turned into Worth magazine.
You can’t read an article about Fidelity in any major publication — The Wall Street Journal, The New York Times, Barron’s, Forbes, Fortune, you name it — without seeing at least one quote from Jim Lowell. Now you can get Jim’s best advice directly from him, as a subscriber to Fidelity Investor.
To determine my top picks from Fidelity’s “best and brightest,” I use a proprietary approach to selecting and evaluating Fidelity fund managers. My proprietary Manager Ranking System (MRS) reveals just how skilled Fidelity fund managers are at selecting stocks, bonds, or a mix of both, and how they have fared relative to the market.
Investing with a manager who has demonstrated their know-how through thick and thin markets and has outperformed against benchmarks and peer groups over meaningful investment timelines makes for a smarter investment than investing with one who hasn’t. Fidelity funds who are led by Fidelity’s top managers will be winners in any portfolio.
The 8 funds listed below are in order of their manager’s “FI Ranking,” which is the rundown of a manager’s record. The FI Ranking is calculated by averaging a manager’s risk-adjusted “career” relative return and their unadjusted “front-weighted average” outperformance. All performance numbers are annualized (return per year). Remember that with relative returns, any positive number reflects benefits from active management (a 0.0 means tracking the benchmark).
Let’s get started…
Pacific Basin (FPBFX); Manager, John Dance
FI Ranking: 4.5
With holdings concentrated in Japan, Australia, Hong Kong and China, Pacific Basin allows you to capitalize on those economies that benefit from lower prices for the oil they import. This makes the products they export more profitable from a bottom-line manufacturing perspective. Plus, they stand to benefit from top-line sales if growth maintains its current mixed-bag trajectory or improves globally.
Manager John Dance took the helm back in October 2013, which means you can’t buy the fund based on its past performance — which was killer: beating 98% of its peers in the 3-year time frame and 100% of them in the 5-year timeframe. Dance did outperform his fund’s MSCI AC Pacific index benchmark last year, with a return of 0.62% versus the index’s loss of 0.88%. But a 1-year record is a bit thin of a read to hang your hat on.
Here, my “buy” rating is based on my desire to be in the one emerging market region that stands to benefit from falling oil prices, as I mentioned before. Japan represents 33.5% of the portfolio, Australia 13%, Hong Kong 10.7%, China 8% and South Korea 6.3%. Top sectors are financials (23.4%), consumer discretionary (17%), health care (12.6%) and I.T. (12.2%).
Top Fund #2:
OTC (FOCPX); Manager, Gavin Baker
FI Ranking: 4.3
Manager Gavin Baker invests in stocks that are traded on the NASDAQ over-the-counter market, which results in some very big guns complemented by a mid-cap tilt. It began trading in December 1984 and has a market value of over $8 billion.
Technology is ubiquitous. It is the oxygen that brings everything to life, from your coffee machine, to your smart phone, to your TV, to your car, to your home, to your doctor, to your… you get my point. You’d have to put something awful funny in today’s technology pipe to not see it as clearly a growth opportunity. Buy OTC and plug into long-term gains.
Top Fund #3:
Select Healthcare (FSPHX); Manager, Eddie Yoon
FI Ranking: 3.5
Eddie Yoon 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 companies. It began trading in July 1981 and has a market value of almost $9 billion.
I like Select Healthcare for reasons that follow this refrain: healthcare provides necessary goods and services for huge, worldwide demographics that are aging and whose collective demand isn’t slowing.
Eddie Yoon invests with an eye on the necessary demographic trends and stories of aging boomers needing a youth-inducing crutch as well as on the emerging market theme of new consumers demanding better healthcare.
Blue Chip Growth (FBGRX); Manager, Sonu Kalra
FI Ranking: 1.8
Manager Sonu Kalra invests in blue chip companies that he believes have above-average potential for earnings growth. Blue chips are defined as companies found in the S&P 500 or Dow, or companies having at least $1 billion in total assets if not included in either index, so there’s mid-cap leeway inbuilt into this fund’s parameters. The fund began trading in December 1987 and has a market value of over $13 billion.
Battleship balance sheets are the best way to ply 2015’s charted and uncharted waters; you never know when the seas will turn turbulent, but you can rest assured that when they do, bigger is better.
Top Fund #5:
Contrafund (FCNTX); Manager, Will Danoff
FI Ranking: 1.1
Will Danoff has been managing Contrafund for almost 25 years. His contrarian style and stellar track record speak to the strengths of a stock picker who knows how to reward shareholders year-in and year-out. Will makes investments across the board in companies believed to be undervalued by the public, overlooked by institutions, and/or underweighted by both. The portfolio is primarily domestic, with 9% of the portfolio currently given over to foreign stocks.
The fund, which began trading in May 1967, was the brainchild of former manager Leo Dworsky, who mentored Will in the art and science of contrarian investing. The fund has a market value of over $110 billion, leading to repetitive journalist sniping about how it’s too big for its own britches. My favorable view is based on Danoff’s actual performance over meaningful time periods. He trailed a bit in 2014—noted. But his 10-year numbers, as well as those of his overall tenure, make this a solid choice for time in the markets, not market timing.
International Growth (FIGFX); Manager Jed Weiss
FI Ranking: .6
I’ve conducted numerous interviews with fund manager Jed Weiss, and FIGFX is my chosen international fund for our fundamentally driven Fidelity Investor portfolios.
Weiss is a steady hand in up markets and has a solid track record of losing less in downdrafts. He runs a concentrated portfolio with only 101 names, and 29% of assets are in the fund’s top 10 names. The fund also sports ultra-low turnover (27%, vs. a peer average of 63%), low cost, and an actively managed approach to the global marketplace. Weiss is growth-oriented in some very disciplined and defined ways, and he has been at the helm of FIGFX since its November 2007 launch.
The fund’s market value is about $800 million, which means Weiss has a lot of room to grow the assets without compromising his stock-picking skills. Currently his top country representations are the U.S. (16.7%), Japan (15.5%), Switzerland (14.8%), the U.K. (13.5%) and Sweden (5.6%). The top sectors are health care (17.6%), financials (16.6%) and consumer staples (15.3%). Among his top holdings are Novartis, Roche, Nestle, Anheuser Busch, Prudential and Linde.
Top Fund #7:
A Mega Stock Pick
FI Ranking: .4
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 here. This manager invests more than 70% of the fund in companies with mega capitalizations of the battleship balance sheet variety, Texas-sized dividend producing, more cash than they can count let alone spend, emerging market capable kind. You could contrast this with Vanguard Dividend Growth, which invests about 40% of its assets in mega cap companies. The manager can reach across the pond, but prefers U.S. battleships.
This manager invests in companies with market caps similar to those found in the S&P 100 Index. It began trading in December 1998 and has a market value of over $3 billion.
Top Fund #8:
FI Ranking: .2
Still inimitable, still head and shoulders above even the best crop of giants you can find in the space, this manager is about as far a cry from leveraged stocks as you can get.
He invests in low priced stocks, which are stocks $35 or less. While that sounds like a gimmick, it’s the secret to this fund’s genius, and was his brainchild, making him of one of the best managers of any generation. It can lead to a small/mid cap tilt. But it can also lean toward even mega-caps in ultra-bear markets (like the one we got in 2008). It began trading in December 1989 and has a market value of over $30 billion.
The manager is a stock picker’s stock picker; if he’s around the water cooler, other managers are keen to hear what he has to say. While unsung by the media, he is a manager that compares with Peter Lynch, his mentor while he was learning the trade. His stealth advantage: he’s always been a global investor. I continue to think the best way to pursue foreign stock opportunities is through managers with longstanding expertise in the foreign stock arena as part and parcel of the global funds, and this manager fits the bill.
Want your portfolio to outperform, year after year?
First of all, you can forget about index funds. You’ll notice I didn’t recommend a single one in this free report — and there’s a good reason for that.
The truth is, by their very nature, index funds are guaranteed to lose. 100% of index funds and index-based ETFs charge some kind of fee…and the amount of that fee becomes a performance gap between the fund and the market, each and every year.
As a Fidelity investor, you can do much better.
Keep in mind that 69% of the Fidelity managers I track are beating their benchmarks (as of July 2015), and have been doing so over the course of their career. It’s an impressive stat, but one that I was not at all surprised to report to my Fidelity Investor subscribers. After all, the simple — but proven — secret to beating the market is just this: lower fees, and greater resources. And the Fidelity fund family has both in spades.
The proof is in the profits. Remember those charts I shared earlier in this report? How my 8 Top Funds consistently outpaced their benchmarks by a wide margin? Yep, that’s Fidelity’s “secret sauce” at work.
But here’s the thing: As great as lots of these funds look at a quick glance, you don’t buy the fund. You buy the manager.
That’s why I developed my own proprietary Manager Ranking System (MRS)…rather than relying on ratings from Morningstar, for example. I wanted a system that would spotlight manager skill, rather than fund luck. And in that, Morningstar is sometimes lacking.
For example, Morningstar doesn’t rate new funds at all. (Makes sense, if you rely solely on a fund’s track record.) But I’ve had some nice success stories of buying these funds “early,” knowing that their managers were highly rated by my MRS, and was able to ride them higher ahead of the crowd.
With strategies like that, my Fidelity Investor portfolios have beat the average Fidelity investor by 118% over the last 17 years. That includes bringing 2.2x more profits in 2014 alone.
And today I’d like to make you a special offer to join my Fidelity Investor community, so you, too, can get the most out of your Fidelity portfolio.
Look, I understand why a lot of people throw up their hands and take the easy way out… by plowing their retirement funds into a Dow or S&P 500 index fund, for instance. But I’m here to tell you that investing in actively managed funds can be just as easy, and more profitable…
…if you have the right information.
Need proof? Since 1998, the Vanguard S&P 500 index fund is up 189% — and that’s, obviously, a very nice result…but my Growth portfolio is up 431% in that same time.
And, as a Fidelity Investor subscriber, I’ll give you simple, specific advice to make those kinds of results happen for you, too.
Best of all, if you join today, you’ll be receiving my advice at a 56% discount…risk free. Instead of my normal rate of $229, you’ll pay just $99.95 for a year of Fidelity Investor. Or, you can lock in two years for $189 (versus $429).
Either way, you can rest easy with my money-back guarantee: If you decide that Fidelity Investor isn’t for you within 6 months, you can get a 100% refund. And if you were to cancel after that, I’d still refund the unused time in your subscription.
But I expect you’ll find that my updates are immensely helpful in making sure your money is in in the right hands at Fidelity. Here’s a quick look at each of the benefits you’ll enjoy with my Fidelity Investor newsletter:
- 5 Model Portfolios: my roadmap for creating a diversified Fidelity portfolio depending on your needs, such as growth, income, or both.
- Monthly issues with all this valuable information packed into just 12 pages:
- My Best Buys list — especially helpful for smaller portfolios.
- Full Performance Review of some of Fidelity’s biggest and most well-known funds.
- Market Monitor commentary, and a Fund Focus with details on a particular group of Fidelity offerings.
- Fidelity Investor Spotlight on special opportunities. Often I interview a Fidelity manager and share any interesting tidbits their research has turned up lately.
- 401(k) models, in which I tailor my fund picks to the specific employer plans that my subscribers pass along.
- Thursday hotlines: my chance to share timely market updates — and make any Trades as needed — in between monthly issues. Occasionally I’ll send a Flash Alert, but only in rare circumstances, such as the Dow moving 5% in either direction.
- Exclusive access to the Fidelity Investor website. As a subscriber, you’ll get instant access to the issue archive, video clips of my TV appearances, an Investing Glossary, special reports, and other members-only resources, including my Correlation Tool.
Join now, and you won’t even have to wait until my next monthly issue or weekly hotline to get started.
That’s because, along with the 56% discount on your Fidelity Investor subscription — that lets you get a year of service for just $99.95 — I’ll also throw in these two special reports (at no additional cost):
- Fidelity Fund Manager Rankings: I’ve crunched the numbers, and rated each Fidelity fund manager I follow according to my proprietary ranking system…and this special report puts the results right at your fingertips.
I review each manager’s performance over various time periods, going back 10 years, and adjust for risk, volatility, and performance relative to the benchmark. This all goes into a simple numerical rating. Then I list the managers by peer group, and by highest to lowest rating…so you can easily see who makes the grade — and who doesn’t.
- Top Fidelity Sector Funds and ETFs for 2015: In any market, there are sector losers and winners…but, even within the same industry, not all stocks are created equal. Luckily, Fidelity makes it their business to do the legwork on these companies — digging through earnings reports, interviewing key players, even traveling long distances to assess trends and opportunities first-hand.
All that’s left for us is to make sure we own the “cream of the crop” Fidelity funds in the best sectors…and this special report will help you do just that.
Both of these resources are my FREE gift to you, in exchange for agreeing to give my Fidelity Investor service a try. And they’re yours to keep…no matter what.
But I won’t be offering the 2 free gifts and 56% off your subscription forever. So, act now and claim this special offer while you can!