Fidelity Puritan: In Balance
This balanced fund invests largely in blue-chip dividend-paying stocks and a mix of bonds.
Editor's note: This is part of a continuing series of articles looking at the 20 biggest no-load stock funds.
Compare the stock holdings of Fidelity Puritan with those of Fidelity Equity Income and you'll be hard-pressed to see differences. The similarities shouldn't come as a surprise because Equity Income's manager, Stephen Peterson, also controls the 60% or so of Puritan's assets devoted to stocks, mostly blue chips with above-average yields. George Fischer invests the rest of Puritan's assets in bonds.
Petersen's stock portfolio is chock-full of big, well-known companies, such as ExxonMobil (symbol XOM), Bank of America (BAC), and American International Group (AIG). In 2006, the fund's healthy stakes in energy, financial and telecommunications stocks helped it achieve a 15% return, four percentage points more than the average balanced fund. Lately, Petersen has been investing in technology and health care stocks, including Intel (INTC) and Johnson & Johnson (JNJ). Bond manager Fischer typically focuses on high-quality IOUs, but he dabbles in high-yield debt on occasion. At the end of 2006, about one-third of the fund's bond allocation was in junk.
Puritan has outpaced the average balanced fund in nine of the past 11 years, although it has lagged Dodge & Cox Balanced, Vanguard Wellington and Fidelity Balanced over the long term. That might be because of a slightly lower allocation to stocks than its big rivals.
Puritan has beaten its in-house rival, Fidelity Balanced, in only three of the past ten years. That's partly because Puritan invests almost exclusively in the market's giants, while Balanced includes large helpings of small and midsize companies, a group that has delivered superior returns over the past few years. But Puritan's focus on large companies means the fund should thrive when those kinds of stocks rebound. Investors who like by-the-book balanced funds should BUY additional shares of Puritan. Annual expenses are 0.62% a year, much lower than the 1.07% average for balanced funds. The fund currently yields 2.8%.
Fidelity Puritan (FPURX)
- Assets: $25.8 billion
- Managers (year started): Stephen Peterson (2000); George Fischer (2004)
- Return (vs. S&P 500)*:
- One year: 13.7% (15.0%)
- Three years annualized: 8.6% (9.5%)
- Five years annualized: 8.5% (6.8%)
- Ten years annualized: 8.7% (8.4%)
- Expense ratio: 0.62%
- Portfolio turnover: 78%
- Minimum investment: $2,500
- Phone: 800-544-8544
- Web site: www.fidelity.com
*Returns through Jan. 22 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.