Fidelity Otc Portfolio: Is It A Smart Investment Move?

The Fidelity OTC Portfolio fund is a large-growth category fund that primarily invests in stocks traded on the Nasdaq composite index or other over-the-counter markets, with a focus on the technology sector. As of November 27, 2023, the fund had assets totalling almost $23.02 billion invested in 173 different holdings. The fund has a Morningstar rating of 7.7/10 and offers commission-free trading on stocks and ETFs. With a history of strong returns, the fund has delivered 21.82% over the past year, 7.12% over three years, 14.01% over five years, and 15.07% over the past decade. The fund's expense ratio is relatively low at 0.78-0.81%, and it requires an initial investment of $2,500. However, Morningstar has rated the fund's risk as high compared to other funds in the category. Therefore, investors should carefully consider their risk tolerance and financial goals before investing in the Fidelity OTC Portfolio.

The fund's high-risk, high-return strategy

The Fidelity OTC Portfolio fund is a high-risk, high-return investment strategy. Morningstar has assessed the fund as high-risk compared to other funds in its category for the trailing three-, five-, and ten-year periods. This is due to the fund's focus on over-the-counter and Nasdaq stocks, with a particular emphasis on the technology sector, which can be subject to significant volatility and rapid obsolescence.

The fund's strategy is to invest at least 80% of its portfolio in stocks traded on the Nasdaq composite index or other over-the-counter markets, with typically more than 25% invested in the technology sector. This focus on high-growth stocks in the technology sector can lead to increased levels of risk and price volatility for shareholders.

However, the fund has also delivered high returns over the same trailing three-, five-, and ten-year periods compared to its peers. As of November 27, 2023, the fund had returned 21.82% over the past year, 7.12% over three years, 14.01% over five years, and 15.07% over the past decade.

The fund's top holdings include well-known technology companies such as Apple, Alphabet (Google's parent company), and Amazon. The fund's managers, Sonu Kalra and Christopher Lin, are both Fidelity veterans who also manage other funds for the company.

Overall, the Fidelity OTC Portfolio fund offers a high-risk, high-return investment strategy that can serve as a complement to other large-cap holdings in an investor's portfolio, provided they understand the potential risks and rewards.

The fund's focus on over-the-counter and Nasdaq stocks

The Fidelity OTC Portfolio fund falls into Morningstar's large-growth category. The fund normally invests at least 80% of its portfolio in stocks traded on the Nasdaq composite index or other over-the-counter markets. As of 27 November 2023, the fund has assets totalling almost $23.02 billion invested in 173 different holdings.

The fund's 10 largest holdings comprise about 46% of the portfolio's value. Among the largest positions are Apple, Alphabet (Google's parent company) and Amazon. As of 31 December 2017, the portfolio held 296 positions.

The fund seeks above-average growth with its focus on over-the-counter and Nasdaq stocks, and its emphasis on the technology sector. The fund could serve as a complement to other large-cap holdings in a portfolio for investors who understand both the fund's potential risks and rewards.

The fund has returned 21.82% over the past year, 7.12% over the past three years, 14.01% over the past five years and 15.07% over the past decade.

The fund's emphasis on the technology sector

The Fidelity OTC Portfolio fund falls into Morningstar's large-growth category. The fund typically invests at least 65% of its assets in securities traded on the over-the-counter market, which has more small and medium-sized companies. The fund also normally invests at least 80% of its portfolio in stocks traded on the Nasdaq composite index or other over-the-counter markets.

The fund has a particular emphasis on the technology sector, with more than 25% of the fund's assets invested in this sector. As of 27 November 2023, the fund had assets totalling almost $23.02 billion invested in 173 different holdings. Among the largest positions were Apple, Alphabet (Google's parent company) and Amazon.

The fund's focus on the technology sector means that it can be significantly impacted by the obsolescence of existing technology, competition from new markets, and general economic conditions. The fund's emphasis on these higher-growth stocks can also subject shareholders to increased levels of risk and price volatility.

The fund could serve as a complement to other large-cap holdings in a portfolio for investors who understand both the fund's potential risks and rewards.

The fund's performance over the past year

The Fidelity OTC Portfolio fund has returned 21.82% over the past year, 7.12% over the past three years, 14.01% over the past five years, and 15.07% over the past decade. As of 27 November 2023, the fund has assets totalling almost $23.02 billion invested in 173 different holdings.

The fund's performance relative to its category is also notable. As of 31 January 2018, the fund placed in the eighth percentile of its Morningstar category for the trailing 12 months, the second percentile for the trailing three years, and the first percentile for the trailing five and ten years. This indicates that the fund has outperformed a significant proportion of its peers in its category over these time periods.

The fund's expense ratio is also relatively low at 0.81%, which is classified as below average by Morningstar.

Overall, the fund's performance over the past year has been positive, with returns above 20% and a strong showing relative to its category.

The fund's expense ratio

The expense ratio of the Fidelity OTC Portfolio fund is an important factor to consider when deciding whether to invest. The expense ratio represents the fund's operating expenses as a percentage of its average net assets. This ratio is used to assess the fund's efficiency in managing its assets relative to its size.

It's important to note that the expense ratio does not include certain expenses such as brokerage costs, which are incurred when buying and selling securities for the fund. These costs are typically covered by the fund's investment adviser or manager.

Additionally, the fund's contractual cap on expenses further ensures cost efficiency. This cap indicates the maximum level of expenses the fund is allowed to incur, providing investors with some protection against excessive fees.

When evaluating the fund's expense ratio, it's also worth considering the fund's performance. Despite its relatively low expense ratio, the fund has delivered strong returns. Over the past year, the fund has returned 21.82%, and its three-, five-, and ten-year returns are also impressive when compared to its peers.

In summary, the fund's expense ratio is a positive factor when considering an investment in the Fidelity OTC Portfolio. The below-average expense ratio indicates efficient management of the fund's assets, and the strong performance reinforces the attractiveness of this fund from a cost perspective.

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