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This Silver-Rated Fund Knows Where to Find Value

Tue, 15 Jul 2014

Its style exposure has shifted over the years, but the fund has delivered a 14% annualized gain since inception and is a good supplement to a large-cap-focused portfolio.


Video Transcript

Katie Reichart: Today we'll be talking about Silver-rated Fidelity Low-Priced Stock. As its name suggests, the fund invests mostly in stocks trading under $35 at the time of purchase. Manager Joel Tillinghast launched the fund in 1989 as a way to take a value-oriented approach to small and mid-caps with some large-cap turnarounds mixed in.

The fund has moved around the style box a bit, moving from small-cap to mid-cap as its asset base grew and recently shifting from mid-blend to mid-value. However, that's no cause for concern. Tillinghast has long used the same approach, which just isn't that easy to pigeonhole.

For instance, the fund recently invested about one third of its assets in non-U.S. equities, where Tillinghast has added value over the long term. It also had about 14% in cash, which did weigh on performance in 2014's first half. However, long term, the fund has been a stellar performer. It has gained over 14% annualized since Tillinghast started the fund in 1989.

The one concern is its size. It's nearly $50 billion in assets, so it can be a little more difficult to outperform. But he takes a relatively low-turnover approach and spreads the fund's assets across about 900 stocks, which he's done a good job of keeping tabs on.

So, overall the fund is a good way to supplement a large-cap-focused portfolio. 

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