Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Just working a bit on our October cover essay and came up with the following quiz question:
Fidelity has all the resources you could possibly hope for in the fund industry, so success should be pretty common. What, then, is the last time that Fidelity launched a fund that earned a five-star rating from Morningstar?
ok, David, i happened to be on fidelity website! here they are FGMNX, FIGFX, SPHIX, FSDPX, FTQGX, FOCPX, FSCRX, and FSCSX -- these are non-index open mutual funds rated five-star by M* as of 8/31.
David, Fidelity Bond funds are doing v well. I believe good diversified equity funds performance lags due to asset bloat. Their sector funds are doing good inspite of the mgr rotation.
Of all funds launched in the past 10 years, 152 now carry five-star ratings. Of the 156 Fidelity (Fidelity, Fidelity Spartan, Fidelity Advisor, Fidelity Series, Strategic Advisers) funds launched in 10 years, I can find two that have excelled: International Growth and a bond index fund.
There's some fuzziness in the numbers. I screen for "distinct portfolios" because otherwise each fund is reported seven times. Unfortunately, because of the way odd way (if a company launches a fund with five share classes on the same day, one is assigned the title "oldest share class" and then tracked) that Morningstar's database tracks fund inception when you use the "distinct portfolio," I might have missed a fund or two.
Maybe 4 of 156? System-wide, 10% of funds earn the designation.
156 new funds started by Fidelity in the last 10 years? This is absolutely nuts. There are not that many different investment strategies and never have been. Fidelity's marketing folks are obviously earning their money. Heaven forbid the company just close some funds and not take new money. Heck no! Let's just open 156 new funds on top of the 150 we already have!
I did a little checking - the duplicity, though still probably sizable, is nowhere near as large as the raw numbers would suggest. I used M* to look at all unique (just one share class of) funds managed by Fidelity, and how many of those did not have 10 year records. (Typically, though not always I believe, M*'s screener looks at the oldest share class.) I came up with almost the identical number as David.
But around 60 of those are Fidelity Advisor funds, which are often (but not always, e.g. Fidelity Advisor Mid Cap II) clones of noload funds. A spot check showed that both the Advisor fund and the no load equivalent started about the same time, so we can likely remove 40-50 funds as clones (i.e. just as one would not count multiple share classes as different funds, I'm not counting clones either). Then there are the Fidelity Freedom K funds - clones of Fidelity Freedom funds, but with lower expenses and marketed to retirement plans.
Then there are all the target date funds - targeted every five years. These are different funds, using the "same" strategies, but legitimately different in the sense that their mixes are well defined and different. Where there is arguably overlap is that Fidelity started a series of such funds, for retirement plans only (Freedom Index 20xx) that use index funds rather than actively manged funds as their underlying holdings. But index funds vs. actively managed funds seems a fair distinction, IMHO.
In short, a good chunk of the high number is due to multiple share classes (or clones) showing up as "new" funds, and a good chunk is because of target date funds that inflate the figure you're seeing. Not to say that Fidelity didn't launch a whole slew of truly distinct funds, just they didn't create anywhere near 156 different funds.
I was trying to be both quick and careful, a tough balanced act. You're certainly right that the bottom number is going to be contested. In general, I screened for "distinct portfolios only" to eliminate a lot of share classes. The screener did leave in the "K" classes, and so did I. That said, they appeared to launch:
26 Fidelity funds for retail investors
18 Fidelity Series funds - which are available for purchase only by other Fidelity funds and almost none of which duplicate other Fido funds.
20 Strategic Advisers funds (e.g. SMid Cap Multi-manager) - few of which duplicate portfolios elsewhere in the lineup
9 Spartan index funds, some of which overlap Series index funds
58 Fidelity Advisor funds - some (Advisor Small Cap Value) of which are near-duplicates of other Fidelity funds. But, it turns out that a fair number are either unique to the Advisor lineup or are distinct from their Fidelity sibling. The 14 "Income Replacement" series, for example, are distinct to the Advisor line. Will Danoff's Advisor New Insights fund, for example, is not a clone of Contrafund and, as you note Midcap II A is sort of a free agent. Advisor Value Leaders is bad, but unparalleled.
13 "W" class Freedom Index funds are another distinct adviser-only set, which have the same target dates as the Freedom series but which execute exclusively through index funds.
Finally, in a forest-and-trees sort of way, we might return to my original concern: when was Fidelity last able to launch a good, actively-managed fund? They've have one five-star fund that's been launched in the past decade and most of the four-star ones are index funds.
Sorry about the duplicity - no insult intended - just spending too much time looking at numbers and not English.
I agree with you about the basic concern being Fidelity's ability to run actively managed fund, and would take an even broader perspective to question their ability in general, not just with new funds. After all, when they change managers, they wind up with a completely different fund anyway, so new, old, doesn't matter.
It's been many years since I've looked seriously at Fidelity equity funds. Fine brokerage, but house funds usually leave something to be desired.
Hope my posts aren't redundant, or for that matter, duplicitous
Comments
That's all from me, David. My magic 8 ball just powered down and the Ouidja board is the the shop for repairs.
Regards,
Catch
a) ever had a 5 star rating from M* but not necessarily at this time?
or
b) has 5 star rating from M* now?
Which one?
Also: Is your question related to this article?
Fidelity Bond funds are doing v well. I believe good diversified equity funds performance lags due to asset bloat. Their sector funds are doing good inspite of the mgr rotation.
Of all funds launched in the past 10 years, 152 now carry five-star ratings. Of the 156 Fidelity (Fidelity, Fidelity Spartan, Fidelity Advisor, Fidelity Series, Strategic Advisers) funds launched in 10 years, I can find two that have excelled: International Growth and a bond index fund.
There's some fuzziness in the numbers. I screen for "distinct portfolios" because otherwise each fund is reported seven times. Unfortunately, because of the way odd way (if a company launches a fund with five share classes on the same day, one is assigned the title "oldest share class" and then tracked) that Morningstar's database tracks fund inception when you use the "distinct portfolio," I might have missed a fund or two.
Maybe 4 of 156? System-wide, 10% of funds earn the designation.
David
Fido funds daily pricing +, & M* rating, full list
But around 60 of those are Fidelity Advisor funds, which are often (but not always, e.g. Fidelity Advisor Mid Cap II) clones of noload funds. A spot check showed that both the Advisor fund and the no load equivalent started about the same time, so we can likely remove 40-50 funds as clones (i.e. just as one would not count multiple share classes as different funds, I'm not counting clones either). Then there are the Fidelity Freedom K funds - clones of Fidelity Freedom funds, but with lower expenses and marketed to retirement plans.
Then there are all the target date funds - targeted every five years. These are different funds, using the "same" strategies, but legitimately different in the sense that their mixes are well defined and different. Where there is arguably overlap is that Fidelity started a series of such funds, for retirement plans only (Freedom Index 20xx) that use index funds rather than actively manged funds as their underlying holdings. But index funds vs. actively managed funds seems a fair distinction, IMHO.
In short, a good chunk of the high number is due to multiple share classes (or clones) showing up as "new" funds, and a good chunk is because of target date funds that inflate the figure you're seeing. Not to say that Fidelity didn't launch a whole slew of truly distinct funds, just they didn't create anywhere near 156 different funds.
"Duplicity"? Uhhhh ...
I was trying to be both quick and careful, a tough balanced act. You're certainly right that the bottom number is going to be contested. In general, I screened for "distinct portfolios only" to eliminate a lot of share classes. The screener did leave in the "K" classes, and so did I. That said, they appeared to launch:
26 Fidelity funds for retail investors
18 Fidelity Series funds - which are available for purchase only by other Fidelity funds and almost none of which duplicate other Fido funds.
20 Strategic Advisers funds (e.g. SMid Cap Multi-manager) - few of which duplicate portfolios elsewhere in the lineup
9 Spartan index funds, some of which overlap Series index funds
58 Fidelity Advisor funds - some (Advisor Small Cap Value) of which are near-duplicates of other Fidelity funds. But, it turns out that a fair number are either unique to the Advisor lineup or are distinct from their Fidelity sibling. The 14 "Income Replacement" series, for example, are distinct to the Advisor line. Will Danoff's Advisor New Insights fund, for example, is not a clone of Contrafund and, as you note Midcap II A is sort of a free agent. Advisor Value Leaders is bad, but unparalleled.
13 "W" class Freedom Index funds are another distinct adviser-only set, which have the same target dates as the Freedom series but which execute exclusively through index funds.
Finally, in a forest-and-trees sort of way, we might return to my original concern: when was Fidelity last able to launch a good, actively-managed fund? They've have one five-star fund that's been launched in the past decade and most of the four-star ones are index funds.
For what it's worth,
David
I agree with you about the basic concern being Fidelity's ability to run actively managed fund, and would take an even broader perspective to question their ability in general, not just with new funds. After all, when they change managers, they wind up with a completely different fund anyway, so new, old, doesn't matter.
It's been many years since I've looked seriously at Fidelity equity funds. Fine brokerage, but house funds usually leave something to be desired.
Hope my posts aren't redundant, or for that matter, duplicitous