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By Christine Benz and Katie Rushkewicz Reichart, CFA | 01-09-2013 02:00 PM

Fidelity's 2012 Leaders and Laggards

Relative to their categories, Fidelity's stock funds generally fared better than its fixed-income portfolios last year, but several funds in both camps have good long-term prospects.

Christine Benz: Hi. I am Christine Benz for Morningstar.com. In a strong equity market overall, many Fidelity equity funds notched very good performance. Joining me to share some color on the year-end Fidelity funds is Katie Reichart, she is a senior fund analyst with Morningstar. Katie, thank you so much for being here.

Katie Reichart: Thanks for having me.

Benz: So, the headline is, if you had a core-type fidelity equity fund or a core bond fund, chances are you are seeing that you had positive returns in 2012, but you are here to kind of discuss relative performance. How these funds did relative to their category peers? So, let's start with kind of the headlines. Domestic equity and international equity generally had pretty good performance in relative terms.

Reichart: Yes. There certainly were pockets of strength and weakness, but across the board, the average diversified domestic-equity fund had a category rank of 34 in 2012, and for international equity it was 36, so pretty good. Fixed income was a different story. The average category rank for taxable-bond funds was 53 and for municipal-bond funds was 60.

Benz: So, [the latter two categories were a] touch below-average there. So, let's drill into some of the specific asset classes. Let's start with domestic equity. You noticed that one of the biggest small-cap winners or one of the biggest winners within the firm's overall lineup, was Fidelity Small Cap Discovery. Let's talk about what went on there. And I know that we have it at Silver Analyst Rating currently, so we like it long-term, as well. Let's talk about that particular fund?

Reichart: That fund did really well in 2012. It was up 24% and in the category's top 5%. The manager Chuck Myers has done really well in the past several years. Some of his bets that he made early on coming out of the financial crisis on homebuilding stocks, those really paid off in 2012, but just generally, his stock-picking has been quite good.

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