Why We Upgraded These 2 Fidelity Funds

Russel Kinnel: We set a high bar for a fund to receive a Gold

. It has to have a very strong combination of managers and analysts, strategy, parent company, and fees. Recently, we upgraded two Fidelity funds from Silver to Gold. We also upgraded Fidelity’s to High. Let’s dive into what drives each fund.

We Upgraded These 2 Fidelity Funds to Gold

1. Fidelity OTC Portfolio FOCPX
2. Fidelity Small Cap Growth Fund FCPGX

Fidelity OTC manager Chris Lin has proven to be an adept growth investor with a knack for getting ahead of the next growth story. We rate

High and Above Average. Lin made a savvy move to heavy physical-asset companies like Intel INTC, Seagate Technology STX, and KLA KLAC. Conversely, he sold household names like Mastercard MA and T-Mobile TMUS. Since taking over in 2017, Lin has delivered an annualized return of 21%, which is 300 basis points ahead of the Russell 1000 Growth. The main caveat here is that whenever we receive returns that good, it’s fair to wonder whether a correction is on the way for the manager’s favorite stocks.

We also boosted Fidelity Small Cap Growth’s rating to Gold as its Process was elevated to High and the People rating was held at Above Average. Lead manager Patrick Venanzi has done an excellent job since taking over the helm in 2011. He invests in a mix of established growth plays and fast-growing young companies. The fund’s portfolio is a broad 300-stock group that includes a bunch of biotech names that boost both the risk and the return potential here.