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The Fidelity Blue Chip Growth Fund: Headed for a Difficult Year?

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The Fidelity Blue Chip Growth Fund: Overview

The Fidelity Blue Chip Growth Fund (FBGRX) had a sizable asset base, amounting to $19.2 billion as of January 2016. The fund releases holding data quarterly. As of December 2015, its assets were spread across 385 holdings and included stocks of salesforce.com (CRM), Gilead Sciences (GILD), Visa (V), MasterCard (MA), and Analog Devices (ADI), which comprise a combined 8.0% of the fund’s portfolio.

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The Fidelity Blue Chip Growth Fund’s performance

From a purely NAV (net asset value) return standpoint, the FBGRX was an above-average performer for both 2015 and January 2016. For those time periods, it stood fifth and fourth, respectively, among the 12 funds in this review. However, the one-year period ended February 12, 2016, was difficult for the fund. It slipped to the eighth spot among the 12 funds selected for this review.

Other metrics

The FBGRX’s standard deviation, or the volatility of returns, in the one-year period ended February 12 was 18.4%. This was much higher than the S&P 500’s 16.4% and a little lower than the peer group’s average of 18.6%.

The fund’s risk-adjusted returns, calculated by the Sharpe ratio, amounted to -0.57, worse than the S&P 500’s -0.47 for the one-year period ended February 12. For 2015, the fund’s risk-adjusted returns were much better than the index’s as well as those of a lot of its peers. Even though the fund’s point-to-point return performance for 2015 was better than seven of the 12 funds in this review, the high volatility of its returns pulled its risk-adjusted performance metric down.

The information ratio, calculated with the S&P 500 as the benchmark, was -0.5 for the one-year period ended February 12. The information ratio measures the fund manager’s consistency and ability to generate excess returns over a benchmark. However, we can’t evaluate a negative information ratio.

A note to investors

The fund’s risk-adjusted performance was good in 2015. However, 2016 has been difficult so far for the fund, and this is reflected in the high volatility of returns and poor point-to-point returns. The fund’s alpha-generating ability will be under close observation as 2016 progresses. If the fund’s sectoral allocation or other characteristics appeal to you, you’d be well advised to wait a bit before going ahead with your investment to see whether the fund managers can manage volatility better. In the next article, we’ll look at the Fidelity Growth Company Fund (FDGRX).

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