fidelity fund results for 2012

[mathjak107]

looks like this year was not so hot for indexing. the mad rush to index now has everyone loading up on the same stocks over valuing things. that left the rest of the markets for the fund managers to run wild in and adding alpha..

82% of fidelitys large cap funds beat the s&p 500 index.

out of 28 large cap funds all but 6 beat their index

out of 16 mid-small cap funds all but 6 beat their index

out of 27 international funds all but 5 beat their index

high yield bond had a tie with 4 of the 8 funds beating their index
same in muni bonds dead tie.

in the balanced catagory fidelity balanced fund and puritan failed to beat their indexes.
all the reits and convertable stock funds beat their indexes.

the best funds were:
large cap - fidelity capital appreciation up 22% vs s&p up 16%

remember this is after fees on the fidelity funds are included
but includes no fees on the index funds subtracted out yet.

mid-small cap-fidelity leveraged company up 29% index was 16%

reits - fidelity international real estate up 44%. index 16%

international funds - fidelity emerging market discovery up 36% index 17%

bonds - fidelity corporate bond fund up 10%. index up 4.2%


best fund for risk vs reward fidelity new market income -up 20% with less then 1/2 the volatility of the s&p

 

[foxfirev5]

I show for Intl REITS that the S&P Ex US Global index was up 40% for the year. What Int'l REIT index was only up 16%?
While I use both actively managed and index funds I have a tough time believing that most active funds will beat the benchmark over a long period of time. However I'm still riding the Pimco TR Fund.

 

[mathjak107]

they show all all the reits against the s&p for some reason .perhaps because there was such a difference between abroad and domestically a global index was not used..

but even so if you look at it as international then fidelity international real estate still beat the international index.

that is correct about the trend , but it also may be a trend going forward since so many have all jumped on indexing.
to really make money in equities you need to go where others are not and it is becoming easier and easier to find where they are not.
time will tell.

but non the less it was a landslide overall for 2012. i have not seen other fund family results yet but i would bet they are similiar.

 

[donheff]

Interesting to see if this holds up.

 

[mathjak107]

if all the fund families had similiar results and you can almost pick funds blindly and have the funds beat their indexes it may bear watching for future trends because a landslide like that is rare..

it was bound to happen where you have so many changing to indexing and those stocks are getting most of the action . the more the performers add driving up the index the more they effect the index when they drop. it is not like the index fund can sell it,take profits and move on.

you can bet your bottom dollar on a bad day for apple that nadaq will be down despite you may have a bunch of other stocks that are up.

one year means nothing long term but it does show that indexing does not always beat actively managed all the time and it gives us a heads up to watch for future trends.

i do question some of the indexes used like the s&p 500 for reits but overall the performance for managed funds was way out of character.

last year only 12% of large caps beat their index

 

[Animorph]

I use the RWX ETF (SPDR DJ International RE) to benchmark FIREX (Fidelity foreign RE). Fidelity did have an edge on it this year (44.16% vs. 39.12%), though that hasn't been the case in the past. Over the last 5 years it's Fidelity -2.91% vs. RWX -0.57%. I've been switching to RWX when convenient.

 

[LOL!]

As for large-caps beating the S&P500, no big deal: Just add some large-cap foreign funds. Moral of story: choose your index to compare to wisely.

Fidelity Freedom funds did no better than Vanguard Target Retirement funds for the same amount of fixed income.

 

[mathjak107]

it is not so much a case of choosing your index wisely as much as it is a case of many managed funds are free to go anywhere for investments.

 

[samclem]

Interesting to see if this holds up.

It can't hold up in the future because it's almost surely not accurate even now, at least over a significant portion of asset categories (large cap value, large cap growth, etc).

mathjak107 cited a few categories out of at least a dozen possible candidates, hardly evidence that indexing produced disappointing results overall.

And even the results cited are suspect: when we find out that the REIT funds are being benchmarked against the S&P 500 index, it is clear how this Lake Wobegon magic is being accomplished--how all the children are above average. Mathjak--have you got a link to your source so we can take a look at all the categories and the indexes that were used for comparison in each case?

Here's a good study (current as of the end of 2011) of fund performance vs applicable indexes. The SPIVA document is produced every year, the one for 2012 will come out in March 2013. The results will almost surely be the same for 2012 as for previous years: There might be one or two categories (large value, etc) where active managers did better than their benchmark indices for a year, but indexes will win out in the vast majority of categories and (despite protestations otherwise) the categories in which active managers will outperform is not predictable in advance (see the record). As the linked document shows (Exhibit 2) over the window of 2001 through 2006, of the 9 domestic equity categories there were zero in which a majority of active managers did better than the appropriate index. Over the next 5 years (2007 - 2011) there was only one category of the nine where a majority of active managers beat their appropriate benchmark. The same holds for bonds and international equities (See the chart "Report 11" at the link above).

Now, these results are for all funds, not specifically Fidelity. But I'd love to see a strong study that shows a majority of Fidelity funds outperformed appropriate indices in a majority of categories in 2012. Ain't gonna happen. Indexing is doing just fine, thanks.

 

[mathjak107]

im not following what your saying. the 2012 results are 71 fidelity stock funds in total. i can post the returns if you want but it is alot of typing.

then you actually benchmark against what ever you like. see how they did in comparison and post it.

 

[samclem]

I think you are buying somebody's hype.

Just go to Fidelity's web site (Fidelity domestic funds)and look at the performance page for each fund where they compare the fund to the appropriate index.

all the reits and convertable stock funds beat their indexes.

Nope. The very first one I checked, FRXIX, lagged it's benchmark index by .32%

out of 16 mid-small cap funds all but 6 beat their index

I think maybe we've got some creative aggregation going on here by somebody. At the link above I looked across all 59 domestic Fidelity funds. Of these, 8 were in the small cap category
Three did beat their index in 2012:
FSCRX
FCPEX
FCPVX
Five failed to do better than their index in 2012:
FCPGX
FSLCX
FSSPX
FSSVX
FDSCX

I don't know why your source (what is your source?) chose to lump small-cap and mid-cap together, but it makes me suspect a bit of creative grouping.
Fidelity is a fine company, but we'll see again this year that most of their funds in 2012 again failed to do better than their appropriate index. And, in general, the higher their expense ratio the more they'll lag the index.

But I'm very happy to have folks continue to invest in actively managed funds, and to pick their own stocks. It keeps the stock prices accurate and the market efficient. This type of value seeking is essential if indexing is to continue to outperform active management overall.

 

[mathjak107]

here is what i show,since my list has mid cap and small lumped together. but pitted against the wilshire 2000 and russell midcap index .

15 funds if you count the index funds reflecting the 2 indexes. they are in order of performance.

Leveraged Company Stock
Value Strategies
Small Cap Discovery
Value
Small Cap Value
Mid Cap Value
Low-Priced Stock
Russell Midcap Index
Russell 2000 Index
S&P 500 Index​

THE ONES BELOW FAILED
Mid-Cap Stock
Small Cap Growth
Small Cap Stock
Mid Cap Growth
Stock Selector Small Cap​

Growth Strategies

 

[mathjak107]

here is large cap in order.

Capital Appreciation
Large Cap Stock
Independence
Mega Cap Stock
Growth & Income
Large Cap Growth
Dividend Growth
Trend
Growth Company
TaxManaged Stock
Magellan
Stock Selector All Cap
Blue Chip Growth
Equity-Income
Value Discovery
Fidelity Fund
Focused Stock
Contrafund
Stk Sel Large Cap Value
Fifty
Export and Multinational
S&P 500

BELOW FAILED TO BEAT S&P

Disciplined Equity
New Millennium
EquityDividend Income
Growth Discovery
Blue Chip Value​

OTC

 

[mathjak107]

INTERNATIONAL IN ORDER

Emerging Markets Discovery
Int'l Cap App
Europe Capital App
Europe
Overseas
Int'l Small Cap Opps
China Region
Total Int'l Equity
Int'l Discovery
Nordic
Emerging Asia
Emerg Eur, MidEast, Africa
Total Emerging Markets
Pacific Basin
International Value
International Growth
Diversified Int'l
Int'l Small Cap
Worldwide
MSCI EAFE Index
S&P 500 Index

THE ONES BELOW FAILED

Emerging Markets
Japan
Japan Smaller Cos
Canada​

Latin America

 

[samclem]

Mathjak, would it be possible t provide a link to your source?
Thanks for the lists, but they aren't useful in proving the point you are trying to make. To show that a fund has outperformed the approrpiate index (or benchmark), we need to see the appropriate benchmark's performance. For example, the appropriate index for Fidelity Value Discovery Fund is not the S&P 500 (as implied by your list). The correct benchmark is one composed of large cap value stocks, the Russell 3000 Value index, for example. In 2012 the Fidelity fund returned 16.97%, the Russel 3000 Value Index returned 17.55%. Fidelity's own charts show this (see here). This Fidelity fund failed to beat its benchmark.

Similarly, an appropriate benchmark for the Fidelity Equity Income Fund is the Russell 3000 Value index (and Fidelity agrees--see this page). The Fidelity Equity income fund underperformed this index.

There's no point in me going to the Fidelity site and pulling up 57 more comparisons (in addition to the 8 Small Cap funds I did before). Anyone can do it, and the folks who compiled your list should have done it.

 

[mathjak107]

the list is coming from a newsletter so i can't really link it.

it showed the s&p 500 in all cases for comparison but also gave the index that was a proxy.

here are the indexes used


s&p 500 16%

russell mid-cap 17.3

wilshire 2000 16.4

msci eafe 17.3

by shifting to different indexes you certainly can skew the results one way or another but i think what is more important is that it no longer is showing the big disparity the other way with indexes blowing the managed funds away this year..

last year only 12% of fidelitys funds beat their index .

more and more we hear about how once more and more flee to indexing that indexing will eventually shoot itself in the food and no longer be effective and it really is just a heads up to keep an eye on things to see if it just may be true going forward.


as more and more index it becomes more and more a stock pickers market. could we have reached that turning point? beats me but time will tell i guess.

 

[donheff]

I'm not going to check them all but I did check a few of those listed as beating their indexes and got a mixed bag of results. Fidelity reports that three I looked at beat their index and 2 didn't. Something is dodgy.

 

[mathjak107]

more and more the comparisons are becoming less and less meaningful when it comes to managed vs indexing.

it is all going to depend on what index fund someone actually owns as far as how they did.

someone who buys the wishire 4500 as a mid and small cap holding is going to do very different compared to someone who buys other small and mid cap indexes.

even the managed funds themselves are mismatched against their index many times.

take a fund like strategic real return. it is pit against a bond fund index. it is just the opposite of a bond fund in behavior. it thrives on rising inflation but because it manipulates bond swaps to get the commodities portion it is thrown against a bond index.


as for my own investing. i look at my portfolio as a whole and go by that. my index is if im meeting my own goals as thats the only one that counts.

many times we have used managed funds in our model that failed to beat the s&p 500 .

but when combined with other asset classes and utilizing the strengths and weakneses in those managed funds at different times the entire portfolio beat the s&p500 with less risk.

this year the income model i follow turned in an 11% return with less then 1/3 the volatility of the s&p 500.

how do you measure something like that against an index?

you can't really .

 

[photoguy]

Similarly, an appropriate benchmark for the Fidelity Equity Income Fund is the Russell 3000 Value index (and Fidelity agrees--see this page). The Fidelity Equity income fund underperformed this index.

It's even more complicated because the fidelity fund has something like 13% foreign holdings. Foreign did slightly better this year so the underperformance is even worse.

Not surprisingly the underperformance of the Fidelity fund is roughly about the same as it's expense ratio (ER = 0.67%, Fidelity fund return = 17.23, Russell 3000 value = 17.55). It's a little bit less than ER but when you add in a little extra for the increased foreign holdings, it's very close I think.

 

[samclem]

many times we have used managed funds in our model that failed to beat the s&p 500 .

but when combined with other asset classes and utilizing the strengths and weakneses in those managed funds at different times the entire portfolio beat the s&p500 with less risk.

this year the income model i follow turned in an 11% return with less then 1/3 the volatility of the s&p 500.

Right, you've described the major tenet of Modern Portfolio Theory. But I'd argue that there's no need to pay a manager a high ER in order to put that into practice. More important, an active fund's manager can be free to wander all over the place in search of stocks that suite his taste, and/or he might be replaced and the new manager will have a different approach. The resultant style drift makes it harder, not easier, to be sure you are really getting the diversification you need to lower the volatility of the portfolio overall. In a taxable account? Well, then the investor will need to sell and pay the cap gains taxes and look for the next "star" manager.

In March, the SPIVA report covering 2012 will published. We'll see if indexing is dead at that time. Meanwhile, it's worth considering that the publisher of a newsletter may have a vested interest in claiming that managed funds (which he's uniquely qualified to pick--just ask him) are the road to riches. Can't sell many monthly newsletters by telling folks to build an asset allocation plan, buy funds to meet it, rebalance as needed.

 

[mathjak107]

yep, if there is no alpha then you don't need to pay a manager.

but determining whether your getting anything in exchange can be difficult depending on your reference.

it is about gains but it is also about risk level to get those gains.

also you have far more of a selection of managed funds that might meet specific needs at a given time.

fidelity export and multinational was a great fund to own when the dollar was weakening. if you owned it and sold it like we did and moved on to a fund with a manager better weighted for a stronger dollar you had very good performance from the two funds together.

neither fund alone beat their indexes. but by utilizing the strengths of both and escaping the weakness the performance was better then each one alone turned in for the year.

so there is another fly in trying to compare. as far as i am concerned i got alpha from both fund managers.

each one of us can only be our own judge for our own situation..

many times the weightings and goals of managers are better working together with other funds then they are individually.

those funds or indexes that owned dot coms got smashed back in the collapse. other managed funds we held were barely a blip as they were not in that sector. the nasdaq index has not come close to recovering while many small and mid cap funds funds went on to new highs.

 

[Animorph]

If you didn't have all your managed funds, would you replace them with just an S&P 500 index fund? If so, by all means compare them to the S&P 500. I might pick a Vanguard target retirement index or a fixed allocation index instead. Though it might be better to compare the portfolio as a whole, not each individual fund.

I have a slice and dice portfolio. I have plenty of actively managed funds in there. But they are serving within specific allocations, and I am comparing them to an index ETF that is appropriate for that allocation slice. I'm OK when a manager adds some foreign stocks to a mostly domestic fund, or EM to a mostly developed countries fund, and I even have a couple of global funds in there. But if they don't come close to the index ETF for that slice, over a good number of years, they're replaced by shares of that index ETF.

If my alternative was a lazy portfolio of 3 index funds, than I'd benchmark my funds against one of those three index funds.

The big point is that sometimes foreign does better than domestic, or growth better than value, small better than large, or EM better than everything else. Funds that specialize in these categories can't be graded against the S&P 500. That tells you nothing about how good those managers are doing. Even if they were closet indexers their fund mandate might not allow them to look anything like the S&P 500. In that case, you'll hopefully have about half the years beating the S&P 500 and half the years losing to the S&P 500. But hardly ever matching the S&P 500.

 

[mathjak107]

foreign was up more than domestic so you are right. if the managed fund was indexed against the s&p 500 you had to beat it without regards for the manages skill for the most part.

like i said it is great to make comparisons to an index but even in indexing it is all about what index you bought as a fund.

there are many different mid-cap and smalll cap index funds you can buy .

which one you buy determines how you do against managed funds.

personally my opinion is there is to much time wasted with this stuff when it is really all about your own risk vs rewards .


there has not been alot in print either either about indexing and what can happen tax wise when you sell in a taxable account after decades of accumulating capital gains with little taxes and distributions along the way.

they can be tax torpedos un-doing years of low expense in one taxable event. especially if it trips the amt.

i do what works best for myself . following the managed models for 25 years has worked very well for me. it is the bottom line to which road you take.