Research Reigns at Fidelity Balanced

An army of analysts helps the manager of this fund find the right mix of companies.

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

The Fidelity machine is at work in Fidelity Balanced. The fund is ably run by Lawrence Rakers, who picks stocks and sets the allocation (George Fischer selects the bonds). But Rakers, a modest sort, gives full credit to his army of 90 analysts in Boston headquarters. "My whole process is to extract value from Fidelity research," he explains. "I have an incredible amount of resources in Fidelity."

Each day Rakers peruses an internal newspaper that contains succinct one-page company reports prepared by the analysts. He looks for companies with cheap shares that have a discernible catalyst for improvement. Rakers also likes to interview company execs, many of whom make the pilgrimage to Fidelity headquarters. "You can't replace looking a CEO in the eye and asking about the outlook," he explains. Top portfolio holdings include General Electric, Bank of America and JPMorgan Chase.

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By the standards of funds that divvy up assets between stocks and bonds, Balanced is a bit racy. The allocation to stocks, currently 65%, can go as high as 70%, and the fund invests in small and midsize companies, not just giants. Rakers says the fund is suitable for "hungry widows and orphans."

But the returns have been remarkably consistent. Since Rakers became manager in early 2002, the fund has been among the top 10% of balanced funds in two years, the top 20% once and the top 30% twice. Over the past five years, Balanced beat the category average by an impressive four percentage points per year, on average. Sometimes it's nice to have the Fidelity machine putting your money to work.BUY Balanced if you want a fund with a mix of stocks and bonds and you're willing to accept a slightly higher level of risk than that of the typical balanced fund.


Fidelity Balanced (FBALX)

Assets: $22.2 billion

Managers (years started): Lawrence Rakers (2002), George Fischer (2004)

Returns (vs. S&P)*

YTD: 12.2% (16.5%)

One year: 12.1% (15.8%)

Three years annualized: 11.6% (11.2%)

Five years annualized: 10.1% (6.2%)

Ten years annualized: 10.7% (8.1%)

Expense ratio: 0.63%

Portfolio turnover: 65%

Initial minimum investment: $2,500

Phone: 877-208-0098

Web site:

*Returns through December 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.

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

Contributing Writer, Kiplinger's Personal Finance