Fidelity Fifty Fund to Merge With Focused StockA financial instrument giving the holder a proportion of the ownership and earnings of a company..
A special meeting of shareholders is scheduled for May 12 to vote on the proposal to fold Fidelity Fifty into Fidelity Focused Stock. Fidelity’s Board of Trustees has already unanimously supported the move, which will combine two funds with very similar investment goals and the same benchmark into one larger fund.
If approved by shareholders, the merger is expected to take place in early June 2015.
The two funds are managed by Stephen DuFour, who took over Fifty in March 2011. The fund’s name very simply describes its strategy, which is to invest in around 50 growth stocksA stock whose issuing company is expected to grow at a significantly higher rate than the market..
DuFour has managed Focused Stock since March 2007. The fund’s “focused” mandate has resulted in a portfolio concentrated in his best 30 to 80 ideas. DuFour has the ability to pick stocksA financial instrument giving the holder a proportion of the ownership and earnings of a company. from companies of any size, but has generally stuck to the large-cap growth sphere, and primarily opted for U.S. companies. He does not limit himself to any specific industry or sector when looking for names for the portfolio.
The Funds Are Now Nearly Identical
||Fidelity Focused Stock
|Percentage in Top 10
||Sept. 17, 1993
||Nov. 12, 1996
Source: Fidelity. Data as of 3/31/15.
Once taking over Fifty, DuFour reworked the portfolio to his liking, which made it a near mirror image of Focused Stock, giving Fidelity the chance to simplify its fund lineup by combining the portfolios.
One way we like to compare two funds here at Adviser Investments is to look at their relative performance head to head—when we chart those results, it shows up as a single line. When the line is rising, one fund is outperforming the other; when it’s sinking, the comparison fund is outperforming; and when it’s flat, the two funds are performing about the same. As the relative performance chart below shows, the funds have performed almost identically over the last four years.
Sources: Morningstar (data through 3/31/2015). Adviser Investments (analysis).
Beyond giving Fidelity a slimmer fund lineup, the merger also gives the firm a chance to remove Fifty’s performance track record, which isn’t as good as Focused Stock’s, from the books.
Fifty’s shareholders will receive an equivalent value of Focused Stock shares on the day the reorganization takes place. We don’t think the merger is a cause for concern for investors who own either fund, as the combined asset level will still be relatively small for a large-cap growth fund and the strategy should also remain the same under DuFour’s continued management. In addition, investors in Fifty will see their expenses go down from 0.83% to 0.78% with the move.
New Fidelity Fixed Income Index Manager
Effective May 1, Jay Small will assume co-management of all Fidelity passively managed bondA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates. portfolios. He takes over for Alan Bembenek. Small will join current co-manager Brandon Bettencourt.
Small will help oversee Spartan U.S. BondA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates. Index, Series Inflation-Protected Bond Index, Inflation-Protected Bond Index, Spartan Inflation-Protected Bond Index, Spartan Short-Term Treasury Bond Index, Spartan Intermediate Treasury Bond Index and Spartan Long-Term Treasury Bond Index.
He has been at Fidelity since 2010. Before that, he worked as a corporate bond trader at 40/86 Advisors (formerly known as Conseco Capital Management). The move seems fairly routine and should not be a concern for shareholders in the funds impacted.
About Adviser Investments
Adviser Investments operates as an independent, professional wealth management firm with expertise in Fidelity and Vanguard funds, actively managed mutual funds, ETFsA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index., fixed-income investing, tactical strategies and financial planning. Our investment professionals focus on helping individual investors, trusts, foundations and institutions meet their investment goals. Our minimum account size is $350,000. For the fifth consecutive year, Adviser Investments was named to Barron’s list of the top 100 independent financial advisers nationwide and its list of the top advisory firms in Massachusetts in 2017. We have also been recognized on the Financial Times 300 Top Registered Investment Advisers list in 2014, 2015 and 2016.
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Disclaimer: This material is distributed for informational purposes only. The investment ideas and expressions of opinion may contain certain forward-looking statements and should not be viewed as recommendations, personal investment advice or considered an offer to buy or sell specific securities. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed.
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