Fidelity Growth Strategies Shows New Promise

Katie Reichart: Fidelity Growth Strategies is worth watching. Despite a rocky history under previous managers, it has new promise under Jean Park, who took over in August 2013. Park employs a disciplined, risk-conscious approach, favoring companies with positive free cash flow yields, above-average returns on capital, reasonable valuations, and sound capital allocation. Park is a heavy user of Fidelity's quantitative research, but she also digs into the fundamentals and leans on Fidelity's deep analyst team to find competitively positioned companies in attractive industries.

The fund has lived up to its process during her nearly four-year tenure. The portfolio has looked cheaper than the benchmark on a price/free cash flow basis while sporting higher returns on equity and returns on invested capital. Performance has followed the expected pattern, protecting capital better than the benchmark and peers in market pullbacks while participating in up markets--though not necessarily leading the way in lower-quality rallies. Park's off to a strong start, and below average expenses also help.