Editor's note: This is part of a continuing series of articles looking at the 20 biggest no-load stock funds.
You don't have to be little to invest aggressively, as Fidelity Growth Company proves. Steve Wymer, manager of the $29 billion fund since 1997, focuses most of his attention on fast-growing technology and health-care stocks. Each sector accounts for a third of the fund's 275 holdings. The fund, which closed to new investors in April 2006, focuses on companies with rapid revenue growth and stock-market values of more than $1 billion. "The theory is when revenue is growing, potential is there," says Wymer. "But I don't chase growth for growth's sake. I invest in good businesses that will be profitable in the long term."
Wymer searches for what he calls "self-help stories." These are companies improving their business through acquisitions and management changes. He also seeks companies that are in the midst of product cycles that will spark revenue growth. One example: Japan's Nintendo (symbol NTDOY), which recently launched the game console Wii. And he invests in spin-offs, such as Ameriprise Financial (AMP), which American Express jettisoned in 2005.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
In technology, Wymer focuses on niches he thinks have high-growth potential, including wireless technology and Internet search. The fund's top spot, as of September 30, was Google (GOOG). Wymer is betting on the success of the company's advertising platform, in which ads are tailored to each particular viewer. "Google represents one of the best areas of technology," Wymer says. Elsewhere in the tech sector, he likes companies that deal in software-related services, such as Red Hat (RHAT), which gives away the Linux operating system and charges customers for support and consulting services. In health care, Wymer focuses on three areas: biotechnology, diagnostics, and health-care technology. "I'm looking for companies that can grow if health-care spending goes up," says Wymer. Two companies he favors in that realm are biopharmaceutical firms Celgene (CELG) and Elan (ELN).
With Wymer behind the wheel, Growth Company has delivered solid results over the long term. Over the past decade, the fund's 9% annualized return was better than the results of 93% of funds that focus on large, fast-growing companies. But Growth Company can take shareholders on a bumpy ride. The fund has been 25% more volatile than its rivals and can crash when high-octane companies fall out of favor. During the 2000-02 bear market, the fund plunged 69%, compared with a 47% decline for the S&P 500.
Still, given Wymer's fine record versus his peers and our view that large-company growth stocks represent one of the most attractive segments of the market, we suggest that shareholders continue to BUY Growth Company.
FUND FACTS
Fidelity Growth Company (FDGRX)
Assets: $29.2 billion
Managers (year started): Steve Wymer (1997)
Return (vs. S&P 500):
Year to date: 8.0% (12.6%)
One year: 7.9% (11.0%)
Three years annualized: 11.8% (11.3%)
Five years annualized: 5.1% (4.7%)
Ten years annualized: 9.5% (8.6%)
Expense ratio: 0.96%
Portfolio turnover: 50%
Minimum investment: closed
Phone: 800-544-8544
Web site: www.fidelity.com
Data is to Nov. 28
Fund Fact sources: Standard & Poor's, Morningstar
View updated data for this fund and compare the performance of the 20 biggest no-load stock funds.
-
Stock Market Today: The Dow Adds 15 Points To End Its Losing StreakEquity indexes opened higher but drifted lower as markets priced in new Fed forecasts.
-
What Is a Qualified Charitable Distribution (QCD)?Tax Breaks A QCD can lower your tax bill while meeting your charitable giving goals in retirement. Here’s how.
-
The 5 Best Actively Managed Fidelity Funds to Buy Nowmutual funds In a stock picker's market, it's sometimes best to leave the driving to the pros. These Fidelity funds provide investors solid active management at low costs.
-
The 12 Best Bear Market ETFs to Buy NowETFs Investors who are fearful about the more uncertainty in the new year can find plenty of protection among these bear market ETFs.
-
Don't Give Up on the Eurozonemutual funds As Europe’s economy (and stock markets) wobble, Janus Henderson European Focus Fund (HFETX) keeps its footing with a focus on large Europe-based multinationals.
-
Best Bond Funds to BuyInvesting for Income The best bond funds provide investors with income and stability – and are worthy additions to any well-balanced portfolio.
-
Vanguard Global ESG Select Stock Profits from ESG Leadersmutual funds Vanguard Global ESG Select Stock (VEIGX) favors firms with high standards for their businesses.
-
Kip ETF 20: What's In, What's Out and WhyKip ETF 20 The broad market has taken a major hit so far in 2022, sparking some tactical changes to Kiplinger's lineup of the best low-cost ETFs.
-
ETFs Are Now Mainstream. Here's Why They're So Appealing.Investing for Income ETFs offer investors broad diversification to their portfolios and at low costs to boot.
-
Do You Have Gun Stocks in Your Funds?ESG Investors looking to make changes amid gun violence can easily divest from gun stocks ... though it's trickier if they own them through funds.
