Is Fidelity Blue Chip Growth a good buy and hold?

[LXEX55]

I would hold for at least five years. I realize no one has a crystall ball, but, experience and knowledge come into play when decision making. Thanks for reading. Opinions are welcome and appreciated.

 

[Happyras]

I am holding and no interest in selling!

 

[Brat]

FBGRX: Me too. I hold that and VUG which has a similar goal. FBGRX actually returns slightly higher than VUG. I also hold VUG in my grandchildren's my529 as Vanguard is the only option in the Utah 529.

I also bought a small amount of Fidelity Blue Chip Value a couple weeks ago to keep an eye on the market in case of move away from growth to value. Return in that investment has been flat.

IMHO all my investments, particularly in a mutual fund, are holds until they don't meet my expectations.

 

[mrfeh]

FSKAX/FZROX

Own the entire market.

https://www.bogleheads.org/wiki/Bogleheads®_investing_start-up_kit

 

[OldShooter]

... Opinions are welcome and appreciated.

Please don't buy it. FBGRX is a sector fund with above-average fees. That's two strikes in a game where it's one strike and you're out.

Even if you have seen one before, I encourage you to spend some quality time studying a quilt chart: https://www.callan.com/periodic-table/ From it I think you will see that sector performance is effectively random. IOW, a monkey with a dartboard will be as effective at selecting a winning sector as anyone making a deliberate pick.

Also please spend some time with Morningstar's study on picking winning funds: https://www.morningstar.com/articles/752485/fund-fees-predict-future-success-or-failure.html From this I think you will see that a 0.8% fee is a huge handicap if not a killer. To quote from the M* lead paragraph: "The expense ratio is the most proven predictor of future fund returns."

... Own the entire market. ...

This is the proven answer for investors, and a greater than five year horizon makes you an investor and not a speculator.

Does this sound boring? You're right; it is. I tell the students in my Adult-Ed class that investing is boring. If you're not bored, you're not doing it right.

(Lately I have becoming increasingly fond of Nassim Taleb's test: "Don't tell me what you think. Show me your portfolio." In that spirit I will tell you that 90% of our equity portfolio holds the world's stocks on a cap weighted basis, principally via VTWAX. We would not consider making sector bets even with funds that have much more reasonable fees than FBGRX.)

 

[davebarnes]

0.8% fee.
Nope.
0.36% for FNCMX and the same performance

 

[jazz4cash]

I just bought a chunk to replace a large cap index position i liquidated. The expense ratio is pretty high but has been justified for quite a while. Time will tell. I see it has a significant holding in TSLA, a stock I would not ordinarily consider but it appears to be headed for inclusion in the index.

 

[Brat]

This fund only has my love as long as it delivers results better than the alternative.

 

[OldShooter]

This fund only has my love as long as it delivers results better than the alternative.

Sorry, past performance is not predictive. Below is a chart that I use with my Adult-Ed investing class. Apologies to anyone bored/if you have seen it posted before.

On the left is a 5-year ranking of fund managers, highlighting the results of the top quintile, the top 20%, and showing their results for the next five years. Strictly random performance should have kept 1/5 of them in the top quintile but they didn't even manage that.

​

This not cherry-picked data. S&P publishes their "Manager Persistence Report Card" every six months. It analyzes the persistence of manager performance for thousands of mutual funds and the answer is always the same: Manager results are essentially random. You can do an internet search for these reports and read for yourself. It's not at all intuitive, but it's true. Professor French, in the video I linked above/post #5, makes essentially the same analysis from a completely different angle and reaches the same conclusion.

If we dig down to the bottom quintile, the worst performers, there is a tendency to persist because high fees are very effective boat anchors. But the good performers? It's due to luck. There's over a half century of research and data that supports this conclusion.

 

[Brat]

0.8% fee.
Nope.
0.36% for FNCMX and the same performance

Not the same performance. YTD 20% vs 28%, 3 mo 21% vs 26%, 1 mo 6% vs &7%.

I agree that the performance of funds will change. That is why I watch mine like a hawk.

 

[Happyras]

Not the same performance. YTD 20% vs 28%, 3 mo 21% vs 26%, 1 mo 6% vs &7%.

I agree that the performance of funds will change. That is why I watch mine like a hawk.

https://stockcharts.com/freecharts/perf.php?VWIAX,VWENX,SPY,VFIAX,FNCMX,FBGRX

I agree its a tight race. What is interesting is that performance is net of fees, and given FBGRX has such a high fee, all the above arguments would be only validated if it performed with a lower return. However, it is a tight race and with the management, I believe there is somewhat lower (small) risk if you look into such metrics. Oldshooter has a very strong opinion, which I always respect, but I am seeing FBGRX beating FNCMX since 2009, but not prior years.

Since past performance is not future results, the managed fund haters would definitely believe its well over due to perform poorly. I got that read on VHCAX. It was performing very well against FBGRX until late last year and since March was performing no better than the S&P. I dropped it mostly from our portfolios in April, but I am happy with FBGRX for now.

I am likely wrong, but FBGRX is not all NASDAQ/Sector fund, but more of a LC Growth on major sectors. It does tilt largely to NASDAQ however, maybe I need to dig deeper beyond the top ten holdings....

 

[OldShooter]

... Oldshooter has a very strong opinion... managed fund haters ...

To be clear, I don't see this as a matter of opinion or emotion. I was trained as a scientist and engineer to make fact-based decisions. Managed funds produce random results and, because of their costs, they underperform their benchmarks. This is not opinion or emotion, this is fact. It is really old news, actually: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=244153 If you or anyone has facts (not anecdotes) that contradict this, I would like to know as I am as greedy as the next guy.

But ... because the performance is random, there will always be some funds that outperform, especially over short periods. It starts at the one year point where about 1/3 of the funds outperform, two years, a little less than half, and so on. Finally at the five and ten year points there is a minuscule number who have had strong strings of luck. None of that would be of particular interest if we could forecast in advance which will be the lucky ones. We can't.

... Since past performance is not future results, the managed fund haters would definitely believe its well over due to perform poorly. ...

Not me, if you count me as a "hater." There is no such concept as "overdue" in random processes. If I flip heads five times in a row, the odds of tails on the next flip are unchanged: 50/50.

 

[RunningBum]

Take a look at Vanguard PRIMECAP (VPMAX). It beat it's S&P 500 benchmark year after year. Until it didn't. I've held it for a number of years, but when I wanted to limit my yearly income it became a burden because of unpredictable capital gains. I struggled with the decision to sell off most of the shares, because of how well it had been performing, but ultimately decided there was no guarantee at all it would continue to outperform.

 

[OldShooter]

... no guarantee at all it would continue to outperform.

Exactly. The poster child for this was a guy named Bill Miller at Legg Mason. He outperformed for like ten years before his luck ran out and in two years he destroyed the fund. More: https://www.reuters.com/article/us-...er-leaves-firm-amid-faded-glory-idUSKCN10M1DV

I read that someone did a statistical analysis of this situation and concluded that there was a 17% chance of this scenario happening to someone, somewhere. Miller was the lucky monkey. Until he wasn't.

 

[Bamaman]

When I bought Blue Chip, it was part of a diversified portfolio. After the runup since it bombed March 15th, I've actually got too much of my portfolio in Blue Chip, and I'm not so diversified.

Time to look at the market a little closer. It's damned if you do and damned if you don't--make changes right now, that is.