There are plenty of choices in the Large Cap Value category, but where should you start your research? Well, one fund that might be worth investigating is Fidelity Equity-Income Fund (FEQIX). FEQIX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
FEQIX is classified in the Large Cap Value segment by Zacks, which is an area full of possibilities. Investors interested in a stable income stream find these mutual funds very appealing because they have a unique investing strategy. Large Cap Value funds invest in stocks with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value. This tactic often leads to low P/E ratios and high dividend yields; however, these funds’ high growth opportunities are often slowed, as large-cap securities are generally in stable industries with low to moderate growth prospects.
Fidelity is based in Boston, MA, and is the manager of FEQIX. Fidelity Equity-Income Fund made its debut in May of 1966, and since then, FEQIX has accumulated about $10.65 billion in assets, per the most up-to-date date available. The fund is currently managed by Ramona Persaud who has been in charge of the fund since October of 2011.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. FEQIX has a 5-year annualized total return of 13.35%, and is in the top third among its category peers. If you’re interested in shorter time frames, do not dismiss looking at the fund’s 3-year annualized total return of 17.93%, which places it in the top third during this time-frame.
It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.
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. FEQIX’s standard deviation over the past three years is 10.27% compared to the category average of 11.16%. The standard deviation of the fund over the past 5 years is 12.82% compared to the category average of 13.45%. This makes the fund less volatile than its peers over the past half-decade.
Investors should note that the fund has a 5-year beta of 0.73, so it is likely going to be less volatile than the market at large. 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. FEQIX’s 5-year performance has produced a positive alpha of 1.91, which means managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
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, FEQIX is a no load fund. It has an expense ratio of 0.53% compared to the category average of 0.90%. Looking at the fund from a cost perspective, FEQIX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Overall, Fidelity Equity-Income Fund ( FEQIX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Fidelity Equity-Income Fund ( FEQIX ) looks like a good potential choice for investors right now.
This could just be the start of your research on FEQIX in the Large Cap Value 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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This article originally published on Zacks Investment Research (zacks.com).