This Niche Fund Has Returns Of 7.3% Over The Last 10 Years
Low-priced stocks are often associated with being high risk investments. On the other hand, high risk also offers the chance for investors to reap higher returns — and this is exactly what Fidelity® Low-Priced Stock Fund (MUTF: FLPSX) has achieved.
According to Time, the Fidelity Low-Priced Stock fund is a domestic equity portfolio with roughly one-third of its assets invested in overseas companies. The fund has posted gains of 7.3 percent a year over the past 10 years, which is a superior return compared to the broader market.
The fund's manager, Joel Tillinghast, oversees a $40 billion portfolio that holds a whopping 867 stocks, which were bought at a price of $35 per share or less.
The $35 per share maximum purchase price implies that not every holding is a penny stock or even mid-cap sized. The fund holds mega-sized stocks, including Microsoft Corporation (NASDAQ: MSFT), which help minimize risks, although the fund does favor smaller names.
Tillinghast likes to allocate funds toward companies that boast a simple business model and strong competitive advantages.
The fund also charges 0.79 percent a year in fees, which is slightly above the industry average of 0.72 percent fee small- and mid-cap index funds charge. However, the premium in fees may be justified, as the fund managed to keep pace with its peers in the heavily volatile post-Brexit vote market.
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