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How Energy and Materials Foiled the Fidelity Blue Chip Growth Fund’s Returns

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Performance evaluation

The Fidelity Blue Chip Growth Fund (FBGRX) rose by 7.0% in October 2015 over the previous month. In the three- and six-month periods ending on October 30, the fund fell by 3.5% and rose by 1.4%, respectively. In the YTD (year-to-date) period, the fund was up by 6.0%, while in the one-year period, it rose 8.5%. From the end of October until November 19, the fund was up by 0.2%.

The fund has generally been a below average performer for all periods under review. For the one- and three-month periods ending in October 2015, it stood at the eighth and seventh spots, respectively, among the nine funds we’re analyzing in this series. For the six-month period, FBGRX came in sixth place. For the YTD and one-year periods it came in fifth.

Let’s look at what contributed to this below average performance by the fund.

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Portfolio composition and contribution to returns

FBGRX has been around for a while, having been created in December 1987. The latest complete portfolio information available to us is as of September 2015. Hence, for our analysis, we’ll take that portfolio as our base and consider valuation changes as they stood at the end of October 2015. All portfolio percentages mentioned from here on refer to their weights according to changes in valuation between September and October.

Information technology was the biggest positive contributor to the fund’s returns in the one year ending October 2015. Class A shares of Alphabet (GOOG) were the biggest contributor to returns from the sector. Facebook (FB) followed Alphabet in terms of the quantum of positive contributions. Other major contributors included Apple (AAPL), Activision Blizzard (ATVI), Cognizant Technology Solutions Corporation (CTSH), and Freescale Semiconductor (FSL).

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Consumer discretionary stocks—the other sector that commands a big chunk of the fund’s portfolio—were the second-biggest positive contributors to returns. Amazon.com (AMZN) had a big role to play as it contributed over half of the sector’s returns. Meanwhile, GoPro (GPRO) was the biggest detractor during the period. The fund manager has, however, liquidated this holding.

Reasons behind below average performance

Energy was the primary negative contributor to the fund’s returns in the one-year period ending in October 2015, even though it formed only a small fraction of the fund’s portfolio. Negative contributions were also led by Halliburton Company (HAL), with Pioneer Natural Resources (PXD), and Whiting Petroleum Corporation (WLL) also contributing in good measure.

Consumer staples and materials were other major negative contributors to the fund’s returns. While consumer staples were pushed down by negative contributions from Keurig Green Mountain (GMCR), materials were held down by CF Industries Holdings (CF).

In the next part of this series, we’ll look at the historical portfolios of the Fidelity Growth Company Fund (FDGRX).

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