Is Fidelity OTC Portfolio (FOCPX) a Strong Mutual Fund Pick Right Now?

If you have been looking for Large Cap Growth funds, a place to start could be Fidelity OTC Portfolio (FOCPX). FOCPX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FOCPX is part of the Large Cap Growth section, and this segment boasts an array of other possible options. Large Cap Growth mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks. Companies are usually considered to be large-cap if their market capitalization is over $10 billion.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FOCPX. Fidelity OTC Portfolio debuted in December of 1984. Since then, FOCPX has accumulated assets of about $21.66 billion, according to the most recently available information. Christopher Lin is the fund's current manager and has held that role since September of 2017.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 28.39%, and it sits 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 26.58%, which places it in the top 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. Over the past three years, FOCPX's standard deviation comes in at 21.36%, compared to the category average of 17.56%. The standard deviation of the fund over the past 5 years is 17.83% compared to the category average of 14.47%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 1.07, so it is likely going to be more 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. Over the past 5 years, the fund has a positive alpha of 8.35. This means that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Exploring 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 primarily on equities that are traded in the United States.

As of the last filing date, the mutual fund has 88.59% of its assets in stocks, with an average market capitalization of $490.14 billion. The fund has the heaviest exposure to the following market sectors:

1. Technology
2. Retail Trade

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, FOCPX is a no load fund. It has an expense ratio of 0.81% compared to the category average of 1.02%. FOCPX is actually cheaper than its peers when you consider factors like cost.

Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.

Bottom Line

Overall, Fidelity OTC Portfolio ( FOCPX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

For additional information on the Large Cap Growth area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into FOCPX too for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.

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