Mar

2

The 7 Best Fidelity Mutual Funds

Posted by cameron

March 2, 2007 |

In my opinion, if you are looking for perennial 5 star rated funds (Morning Star Rating System) then look no further than these seven. I have owned many mutual funds over the years and some have proven to be cart-horses. These 7 are proven thoroughbreds. I know because I have owned them for many years.

 

Contrafund

This is a giant fund that is closed to new investors except for retirement savings. Will Danhoff has done a good job since he took over although some recent moves may not make sense. Contrafund is about contrarian investing. I was surprised that its top holding is Google; that’s not so contrarian. Contrafund has lagged the general market indices lately so this fund has slipped a bit. It’s also too large to sustain previous performance. It’s still good but it’s time to trim back holdings.

Diversified International Fund

This is the top Fidelity International Fund. A few years ago Fidelity made a mistake by giving the manager, William Bower, other funds to administer. That was reversed in 2006 and I have noticed an improvement. It seems as though it was stalling out earlier. This fund is also closed to new investors but is definitely a proven winner. It just goes to show how important Management is.

Balanced Fund

The performance of this fund is surprisingly good, far better than I had expected. The rising interest rates have created some drag on performance lately. If you like balanced funds and the benefits of automatic rebalancing then you must look at this perennial all-star.

Value Fund

This one is probably the weakest of the bunch. It is a sometimes 5-star, sometimes 3 or 4 star type fund. The only reason I have added it to the list is because it has been smoking over the last 9 months. With investors hedging their bets as to whether we will have a soft landing or not, the market has moved towards value investing. I expect that to start changing later this year and value fund may get “removed” from list.

Canada Fund

This has been the hottest fund at Fidelity. It’s been a screamer. The run-up in oil prices along with the cost of minerals and raw materials has had a lot to do with it. The Canadian economy is heavily influenced by mining and raw materials. Since I expect future oil prices to remain high, the long-term prospects for this fund remain favorable.

Export & Multinational Fund

This fund had a change in management but hasn’t missed a beat. Money has definitely moved in the direction of large dividend paying stocks like these versus the large growth stocks owned by Contrafund for example and consequently “Steady Eddie” funds like this and the Value Fund have outstripped large growth funds over the last year.

International Discovery Fund

This is an International fund that continues to perform year after year. It has taken a bit of a breather over the past year versus others on this list but don’t count it out. This is a strong fund.

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