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Fidelity Focused Stock Joins M500 Changes to the 500 | Russel Kinnel

MacKenzie Davis and Ken Settles left RS Investment Management to start their own firm in early 2014 . Another two, Tim Bei and David Kelley, left to pursue other interests in 2013 . Andrew Pilara, the most senior member of the squad, stepped aside in mid- 2013 to become a senior advisor to the team running this fund. Name Change Dynamic U.S. Growth DWUGX is now Scotia Dynamic U.S. Growth . Morgan Stanley Funds Merge Morgan Stanley Focus Growth merged into Morgan Stanley Institutional Growth MSEGX . Both funds were run as large-growth funds by Dennis Lynch. Morgan Stanley Institutional Growth has a 5 . 25% front load, a 0 . 95% expense ratio, and a $ 1 , 000 minimum investment. The combined fund now has $ 3 . 1 billion in assets. In the Morningstar 500 , we have switched coverage to the surviving fund. AMG Added to Yacktman Name The Yacktman funds now come with parent company AMG ’s name in front, so you’ll see them earlier in the large blend listings on page 26 . In the index, you’ll see them under the AMG heading. Loomis Sayles/Natixis in Index Although it’s confusing, some Loomis Sayles funds come under the Natixis banner, so you’ll see some in the index under the Natixis heading and some under the Loomis Sayles heading. These parent company classifications are chosen by the fund company. œ

I’m adding Fidelity Focused Stock FTQGX to the Morningstar 500 .

What is Morningstar FundInvestor 500 ? The Morningstar FundInvestor 500 features the industry’s best and most notable funds. Use the list to get new in- vestment ideas and track the funds you already own. FundInvestor subscribers have access to one-page monthly reports on all 500 funds on mfi.morningstar.com. Just type in the name or ticker of the fund in the search box.

This marks manager Stephen DuFour’s return to the pages of FundInvestor . A decade ago, DuFour ran Fidelity Equity Income II (now Fidelity Equity Divi- dend Income FEQTX ) with subpar results. They weren’t awful, just below average. It was still a dis- appointment because DuFour had been considered a rising star. Yet he’s revived his career with strong, top-quintile results managing Fidelity Focused Stock since March 2007 . big asset base, a diffuse portfolio, and a relative value strategy. Fidelity Focused Stock is a large-cap growth-at-a-reasonable-price fund with a modest asset base of $ 2 billion. From March 2007 to March 2014 , the fund has nearly doubled its benchmark’s returns. Impressively, it has only lagged in 2009 , and since it lost a fair amount less than its peers in 2008 ( 33% versus the typical peer’s 41% drop), that can be forgiven. The fund is definitely an unusual one. DuFour runs huge turnover of 200% and pays no heed to benchmark weightings. To manage some of that risk, he tends not to go over 6% in a top holding. RS Value Goes Out To make room, I am taking RS Value RSVAX out of the Morningstar 500 . We rate the fund Neutral because it has seen wholesale manager changes in the past 12 months. A total of five managers have left in the past year, and the five current managers were all named to the roster during the same period. There are quite a few differences between his current and former charges. Fidelity Equity Income II had a The fund charges a modest 0 . 89% expense ratio.

Summary of Changes

Add

Drop

Fidelity Focused Stock RS Value Morgan Stanley Institutional Growth Morgan Stanley Focus Growth

Rating Change

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From

American Century Growth

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PIMCO EqS Pathfinder

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PIMCO Unconstrained Bond

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Century Small Cap Select

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Laudus US Large Cap Growth

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