Fidelity Blue Chip Growth: Uninspiring

Editor's note: This is part of a continuing series of articles looking at the 20 biggest no-load stock funds.

The prospects for blue chip stocks are bright, but the outlook for Fidelity Blue Chip Growth is hazy. The fund, which invests in large, fast-growing companies, has ranked in the bottom 30% of its peer group in each of the past four calendar years. Over the past decade, it gained 6% annualized, matching the average large-company growth fund, but lagging the S&P 500-stock index by an average of nearly three percentage points a year.

And now the fund has a new manager. After more than a decade at the helm, manager John McDowell retired in November. His co-manager, Brian Hanson, also left, to concentrate on other funds. Enter Jennifer Uhrig, who previously skippered Fidelity Advisor Equity Growth, a load fund with a mission similar to that of Blue Chip Growth. During her nine-year tenure, Equity Growth performed roughly in line with its peers. But while Blue Chip Growth has been stuck in a rut because McDowell and Hanson clung tightly to an out-of-favor style, Uhrig was able to invest in some medium-sized companies at Equity Growth.

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In her nearly three months on the job, Uhrig has guided Blue Chip Growth to a 3% gain. That's still a percentage point behind the S&P 500. The fund's top holdings represent a who's who of, well, blue-chip names. They include Johnson & Johnson, Microsoft, Apple and Wal-Mart. Nearly 10% of the fund's assets were recently in pharmaceuticals, including Merck, Wyeth and Schering-Plough. Altogether, health and technology stocks account for half of assets.

Given Uhrig's uninspiring track record, we see no compelling reasons to stick with Blue Chip. Current shareholders should SELL this fund.

FUND FACTS

Fidelity Blue Chip Growth (FBGRX)

Assets: $20.1 billion

Managers (year started): Jennifer Uhrig (2006)

Return (vs. S&P 500)*:

One year: 4.0% (13.3%)

Three years annualized: 4.9% (10.1%)

Five years annualized: 2.5% (7.0%)

Ten years annualized: 5.6% (8.4%)

Expense ratio: 0.63%

Portfolio turnover: 48%

Minimum investment: $2,500

Phone: 800-544-8544

Web site: www.fidelity.com

*Returns through January 30

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.

Go to A Close Look at the 20 Biggest No-Load Stock Funds.