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Is Fidelity Focused Stock Fund (FTQGX) a Strong Mutual Fund Pick Right Now?

Zacks.com logo Zacks.com 1/4/2022

There are plenty of choices in the Mutual Fund Equity Report category, but where should you start your research? Well, one fund that may not be worth investigating is Fidelity Focused Stock Fund (FTQGX). FTQGX holds a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.

History of Fund/Manager

FTQGX finds itself in the Fidelity family, based out of Boston, MA. Since Fidelity Focused Stock Fund made its debut in November of 1996, FTQGX has garnered more than $3.95 billion in assets. Stephen DuFour is the fund's current manager and has held that role since March of 2007.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 25.03%, and it sits 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 26.6%, which places it in the middle 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. FTQGX's standard deviation over the past three years is 18.83% compared to the category average of 19.77%. Over the past 5 years, the standard deviation of the fund is 16.54% compared to the category average of 16.92%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 1, so it is likely going to be as volatile as 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. With a positive alpha of 6.25, 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 principally on equities that are traded in the United States.

As of the last filing date, the mutual fund has 88.74% of its assets in stocks, which have an average market capitalization of $489.66 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance
  3. Retail Trade
Turnover is 140%, which means, on average, the fund makes more trades in a given year than the average of comparable funds.

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, FTQGX is a no load fund. It has an expense ratio of 0.86% compared to the category average of 1.01%. So, FTQGX 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 Focused Stock Fund ( FTQGX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.

This could just be the start of your research on FTQGXin the Mutual Fund Equity Report 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. 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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