Fidelity Large Cap Stock Fund and S&P 500 are similar funds. These two funds heavily invest in large market capitalization company common stock, topping 80% of its entire portfolio.
Fidelity Large Cap Stock Fund consists of normally 11 different sectors for equities listed in highest portfolio weight with first five sectors making 80% of the portfolio:
• Information Technology
• Health Care
• Consumer Discretionary
• Consumer Staples
• Telecommunication Services
Current year-to-date performance of the Fidelity Large Cap Stock Fund (FLCSX) was overall positive at 16.24% year-to-date return.
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0 indicates that a fund’s historical returns have fluctuated more than the bench market index; R-Squared measurement against an appropriate benchmark explains the level of association between the fund’s volatility and market risk. This is used to measure the result of the day-to-day fluctuations in the overall market. This measurement ranges between 0 and 1, and 1 indicating the perfect correlation to the benchmark index. Lower the index, more the fund’s performance is affected by factors other than the market. 0.5 indicates that the Annualized Alpha and Beta are not reliable performance statistics; Sharpe Ratio is used to measure the return of an asset compensates the investor for the risk taken. Higher the ratio means the better return of the fund’s per unit of risk; Standard Deviation is used to measure the variation of the return value over an extended period of time. The larger the deviation means more variable the returns.
The rationalization of these four statistical measures provide you with the basic understanding on using them to apply the idea of the most favorable portfolio presumption, which uses volatility to ascertain risk and states a rule for deciding how much of a fund's volatility has a better chance of giving you the most return.
“Risk management is best deﬁned as the management of risk over a speciﬁed time period in situations where volatility exists and managers have the opportunity to change the expected cash ﬂows. If managers cannot change the expected cash ﬂows, there would be no opportunity to manage risk. The following Risk is a measure of the potential changes in value that will be experienced in a managed portfolio as a result of differences in the economic environment between now and some speciﬁc point in the future.”
(Blackwell, David W.; Griffiths, Mark D; Winters, Drew B., 2007, Modern Financial Market, p.283)
The year-to-date FLCSX fund results were:
• Beta – 1.18
• R Square – 0.97
• Sharpe Ratio – 1.22
• Standard Deviation – 16.02
From these four measurements, I can say that the funds correlated almost perfect to the benchmark index; although the funds reached a little bit more than the historical return.
The funds also had not as steep as volatile year-to-date while returning an increased return per unit of risk. The FLCSX fund manager Matthew Fruhan; who is known as one of the best performing fund managers at Fidelity had a successful year-to-date performance in 2013. With the signs and speculations of economy recovery in North Americas, Fruhan’s strategy of creating a portfolio that is aggressive yet conservative fund diversification was a success. His portfolio consisted of more than 90% in U.S. Common Stock while putting 100% of his funds in developed markets. 2013 year-to-date performance topped S&P 500’s year-to-date return of 13.82% by 2.42%. Services and Technologies were two out performing sectors in Fruhan’s portfolio. While the management’s strategy was a success in current...