Editor's note: This is part of a continuing series of articles looking at the 20 biggest no-load stock funds.
With little fanfare, Fidelity's longest tenured fund manager, Joel Tillinghast, has compiled one of the best records in the business. During his 17-year reign at Fidelity Low-Priced Stock, the fund has returned a staggering 17% annualized. That beats Standard & Poor's 500-stock index by an average of seven percentage points a year and the small-company Russell 2000 by an average of six points a year.
As the name indicates, the fund, which is closed to new investors, invests primarily in low-priced stocks. Nowadays, that's defined as stocks that sell for less than $35. Shares of small and midsize companies still predominate, but as the fund has grown to gargantuan proportions (assets are nearing $40 billion), the value-conscious Tillinghast has had to own more names and invest in bigger companies. About 20% of the fund was recently invested in large companies, including Safeway, DR Horton, Pfizer, and Oracle. The sprawling, 800-stock portfolio is diversified throughout most sectors. Annual turnover is 26%, about two-thirds less than the average fund that focuses on midsize, undervalued companies.
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Tillinghast has helped boost the fund's returns over the past few years by devoting an increasingly larger slice of the portfolio to foreign companies. Low-Priced Stock currently has nearly 30% of its assets in international stocks, up from about 13% at the end of 2001. Shares of Brazilian oil giant Petrobras, at last report the fund's biggest holding, gained 51% in 2006.
Low-Priced Stock is colossal for a fund that focuses on small and midsize companies. We're not dissing Tillinghast, whose record is terrific, but given the fund's mission and its heft, we rate Low-Priced Stock a HOLD.
FUND FACTS
Fidelity Low-Priced Stock (FLPSX)
Assets: $39.5 billion
Managers (year started): Joel Tillinghast (1989)
Return (vs. S&P 500)*:
One year: 14.4% (16.7%)
Three years annualized: 16.2% (10.6%)
Five years annualized: 16.2% (7.7%)
Ten years annualized: 15.4% (7.9%)
Expense ratio: 0.88%
Portfolio turnover: 26%
Minimum investment: closed
Phone: 800-544-8544
Web site: www.fidelity.com
*Returns through February 5
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.