Is Fidelity 500 Index Fund (FXAIX) a Strong Mutual Fund Pick Right Now?

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Have you been searching for a Mutual Fund Equity Report fund? You might want to begin with Fidelity 500 Index Fund (FXAIX). FXAIX has no Zacks Mutual Fund Rank, but we have been able to look into other metrics like performance, volatility, and cost.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FXAIX. Since Fidelity 500 Index Fund made its debut in May of 2011, FXAIX has garnered more than $352.77 billion in assets. The fund is currently managed by a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. FXAIX has a 5-year annualized total return of 9.41% and is in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 7.65%, which places it in the top third during this time-frame.

When looking at a fund’s performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Over the past three years, FXAIX’s standard deviation comes in at 21.22%, compared to the category average of 20.95%. The fund’s standard deviation over the past 5 years is 18.73% compared to the category average of 18.64%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should not forget about beta, an important way to measure a mutual fund’s risk compared to the market as a whole. FXAIX has a 5-year beta of 1, which means it is likely to be as volatile as the market average. Alpha is an additional metric to take into consideration, since it represents a portfolio’s performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. FXAIX has generated a positive alpha over the past five years of 0.02, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Examining the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is primarily on equities that are traded in the United States.

The mutual fund currently has 99.02% of its holdings in stocks, with an average market capitalization of $273.83 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology

  2. Finance

  3. Retail Trade

Turnover is about 2%, so those in charge of the fund make fewer trades than the average comparable fund.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, FXAIX is a no load fund. It has an expense ratio of 0.02% compared to the category average of 0.92%. FXAIX is actually cheaper than its peers when you consider factors like cost.

Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.

Bottom Line

Don’t stop here for your research on Mutual Fund Equity Report funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare FXAIX to its peers as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.

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