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Is Fidelity Nasdaq Composite (FNCMX) a Strong Mutual Fund Pick Right Now?

There are plenty of choices in the Index category, but where should you start your research? Well, one fund that might be worth investigating is Fidelity Nasdaq Composite (FNCMX). FNCMX has no Zacks Mutual Fund Rank, but we have been able to look into other metrics like performance, volatility, and cost.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FNCMX. Fidelity Nasdaq Composite debuted in September of 2003. Since then, FNCMX has accumulated assets of about $6.84 billion, according to the most recently available information. The fund is currently managed by a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 14.46%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 17.58%, which places it in the top third during this time-frame.

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When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. FNCMX's standard deviation over the past three years is 14.33% compared to the category average of 7.75%. The standard deviation of the fund over the past 5 years is 14.54% compared to the category average of 8.86%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In FNCMX's case, the fund lost 51.25% in the most recent bear market and underperformed comparable funds by 6%. This might suggest that the fund is a worse choice than its peers during a bear market.

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. FNCMX has a 5-year beta of 1.16, which means it is likely to be more volatile than the market average. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. FNCMX has generated a positive alpha over the past five years of 1.47, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Exploring the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is principally on equities that are traded in the United States.

Currently, this mutual fund is holding 96.69% stock in stocks, and these companies have an average market capitalization of $256.79 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology

  2. Other

  3. Retail Trade

Turnover is 5%, which means this fund makes fewer trades than comparable funds.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, FNCMX is a no load fund. It has an expense ratio of 0.29% compared to the category average of 0.76%. From a cost perspective, FNCMX is actually cheaper than its peers.

While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.

Bottom Line

For additional information on this product, or to compare it to other mutual funds in the Index, make sure to go to www.zacks.com/funds/mutual-funds for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.


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