Fidelity Contrafund: A Smart Investment Choice?

The Fidelity Contrafund is a growth and value stock fund that focuses on generating capital gains rather than income. As of November 27, 2023, the fund had assets totalling almost $105.02 billion invested in 349 different holdings. The fund is actively managed and seeks out capital appreciation by finding value stocks with good growth opportunities. It has averaged an annualized return of 13.88% over the past 34 years, outperforming the S&P 500 Index by 2.77% per year. The fund has a strong track record and is managed by William Danoff, who has been with Fidelity since 1986. However, before investing, it is important to consider the fund's investment objectives, risks, charges, and expenses, and consult a financial advisor to determine if it aligns with your financial goals and risk tolerance.

Fidelity Contrafund's performance

The Fidelity Contrafund (FCNTX) is an actively managed mutual fund that focuses on generating capital gains by investing in large-cap U.S. stocks. The fund has a large allocation to growth sectors, particularly the technology sector, and does not tend to include industries such as energy, utilities, and telecom.

As of November 27, 2023, the fund had assets totalling almost $105.02 billion invested in 349 different holdings. It has returned 22.90% over the past year, 7.30% over the past three years, 12.06% over the past five years, and 12.09% over the past decade.

When compared to the S&P 500 Index, the Fidelity Contrafund has averaged an annualized return that is 2.77% greater. Over the past year, the fund has returned 46.32% compared to the S&P 500's 36.35%. Over three years, the fund has returned 12.42% compared to the S&P 500's 11.91%. Over five years, the fund has returned 19.00% compared to the S&P 500's 15.98%. And over the life of the portfolio, the fund has returned 12.98% while the S&P 500 is not applicable.

The fund's performance over the last few years, as of March 31, 2022, is as follows:

• Annualized one-year return: 9.41%
• Three-year return: 19.04%
• Five-year return: 17.83%

The fund's top sectors as of February 28, 2022, include:

• Information Technology: 29.37%
• Communications Services: 16.39%
• Consumer Discretionary: 13.03%
• Consumer Staples: 2.93%

The fund's top ten holdings as of December 31, 2021, include:

• Meta Platforms Class A (META)
• Microsoft Corp. (MSFT)
• Berkshire Hathaway Class A (BRK.A)
• UnitedHealth Group (UNH)
• Alphabet Inc. Class A (GOOGL)
• Alphabet Inc. Class C (GOOG)
• Salesforce Inc. (CRM)

The fund's management

The Funds Management

The Fidelity Contrafund is an actively managed mutual fund that focuses on large-cap U.S. stocks, with a particular emphasis on companies with strong growth prospects that are undervalued by the market. The fund is managed by Fidelity Investments, with the objective of seeking out capital appreciation by investing in value stocks with good growth opportunities.

As of November 27, 2023, the fund had assets totalling almost $105.02 billion invested in 349 different holdings. The fund has a large allocation to growth sectors, particularly the technology sector, but tends to avoid lagging industries such as energy, utilities, and telecom. More than 45% of the fund's holdings are in the information technology and communications services sectors.

The fund has a low expense ratio of 0.54%, which is significantly lower than the category average of 1.01%. This means that the fund is relatively cost-efficient for investors.

The fund has a strong performance track record, with an average annual return of 13.88% over the past 34 years, outperforming the S&P 500 by 2.77% per year on average. As of March 31, 2022, the fund had posted a three-year return of 19.04% and a five-year return of 17.83%.

The fund's top holdings as of December 31, 2021, included well-known companies such as Meta Platforms Class A (META), Microsoft Corp. (MSFT), Berkshire Hathaway Class A (BRK.A), and UnitedHealth Group (UNH).

Overall, the Fidelity Contrafund is a well-managed, cost-efficient fund with a strong track record of performance. It is a suitable investment for those seeking broad exposure to large-cap U.S. companies with strong growth prospects and a core equity holding. However, due to its focus on domestic large-cap growth stocks, it should not make up the majority of an investor's portfolio.

The fund's investment strategy

The Fidelity Contrafund is an actively managed mutual fund that focuses on generating capital gains rather than income. The fund is benchmarked to the S&P 500 but has a larger allocation to growth sectors, avoiding lagging industries such as energy, utilities, and telecoms.

The fund has a high percentage invested in the technology sector, with over 45% of its holdings in the information technology and communications services sectors. It also has a significant stake in financial services companies, with nearly 20% invested in companies like Berkshire Hathaway.

The Contrafund also owns some privately held companies, such as WeWork and SpaceX, which make up a small percentage of its overall assets but could be beneficial if their IPOs are successful.

Overall, the fund seeks to invest in companies with "best-of-breed" qualities that are underappreciated by other investors. These companies typically have a strong competitive position, high returns on capital, solid free cash flow generation, and strong management teams.

The fund has an expense ratio of 0.54% and has returned 22.90% over the past year, 7.30% over three years, 12.06% over five years, and 12.09% over the past decade.

The fund's risk profile

The Fidelity Contrafund is an actively managed mutual fund that focuses on generating capital gains rather than income. It is a growth and value stock fund that primarily contains equities of large US companies, including Apple, Microsoft, Berkshire Hathaway, Amazon, and Alphabet. The fund has a large allocation to growth sectors but tends to exclude industries such as energy, utilities, and telecom.

The fund has a relatively low volatility skewness of -0.91 and kurtosis of 3.22. It retains 97.49% of its assets under management (AUM) in equities, with more than 45% of its holdings in the information technology and communications services sectors. As of November 27, 2023, the fund had assets totalling almost $105.02 billion invested in 349 different holdings.

The fund is heavily invested in equities, which are subject to greater volatility than fixed-income securities. Stock markets can be volatile and decline in response to political changes, economic setbacks, and other factors. While the fund is largely focused on US stocks, it also has investments in foreign markets, which can be more volatile than US markets.

The fund's domestic and foreign investments will vary in response to various factors, including individual company activities, market and economic conditions, and other economic circumstances. Investments in foreign securities involve greater risk than US investments. Therefore, investors should be aware that they may experience gains or losses when selling their shares.

How to invest in Fidelity Contrafund

The Fidelity Contrafund is an actively managed mutual fund that focuses on large-cap U.S. stocks. As of November 27, 2023, the fund had assets totalling almost $105.02 billion invested in 349 different holdings. The fund is managed by Fidelity Investments and has been managed by Will Danoff since 1990.

The fund's objective is to seek out capital appreciation by finding value stocks with good growth opportunities that are not recognised by the public. The fund focuses on companies with strong management teams, high returns on capital, and solid free cash flow generation. Over 45% of the fund's holdings are in the information technology and communications services sectors, and it has a large allocation to growth sectors.

The fund has returned 22.90% over the past year, 7.30% over the past three years, 12.06% over the past five years, and 12.09% over the past decade. The expense ratio is 0.54%.

To invest in the Fidelity Contrafund, investors can buy shares through a Fidelity brokerage account, mutual fund account, investment advisor, or retirement account. It is important to note that the fund is subject to volatility and that the value of investments can fluctuate. Therefore, it is recommended to consult a financial advisor before investing to ensure that it aligns with your investment goals and risk tolerance.

Frequently asked questions