Launched on Dec. 27, 1989, the Fidelity Low-Priced Stock Fund (FLPSX) has become one of the company's largest mutual funds. The fund was originally established as a way to invest primarily in small company value stocks. As the assets have grown over time, the universe of investment possibilities has grown. Stock prices have continued to go up as the stock market has risen.
The fund originally targeted stocks with prices of $25 and under but has since raised that limit to $35. The fund's assets swelled to almost $35.8 billion in 2018. Fund managers only have so much opportunity in small company stocks when they have such a large asset base. The fund's managers have had to move into mid-cap stocks to put money to work effectively.
Earning an overall four-star rating from Morningstar, the Low-Priced Stock Fund remains one of Fidelity's more popular investment choices.
Fidelity Investments has been around since 1946 and ranks as the second-largest mutual fund company as of Aug. 2018 according to Investment News. Fidelity began as a company overseeing separately managed accounts and has since expanded into brokerage accounts, workplace retirement plans such as the 401(k), and investment advisory services. As of March 2018, the company managed $2.5 trillion in investor assets.
Fund Management Team
Joel Tillinghast managed the Low-Priced Stock Fund by himself from the fund's inception up until Sept. 6, 2011, when six co-managers were added. While many managers at Fidelity bounce around to different funds or manage multiple funds, Tillinghast has stayed relatively focused. Outside of the Low-Priced Stock Fund, Tillinghast only manages the Fidelity Series Intrinsic Opportunities Fund ("FDMLX"), a fund with a similar management style to the Low-Priced Stock Fund but without the share price restriction.
Two of the co-managers appointed in 2011 are still managing the fund: John Mirshekari and Shadman Riaz.
The Low-Priced Stock Fund has one of the more unique investment objectives in the mutual fund industry. Share prices on stocks are essentially arbitrary, so focusing on stocks with prices under $35 shouldn't, in theory, eliminate any particular sector or company size. Low share prices, in general, tend to lead to smaller companies, which the fund's managers aim to focus on.
The fund seeks to deliver long-term capital growth by investing primarily in smaller companies the managers believe are undervalued relative to their intrinsic values. Investments in small companies tend to be riskier, and this fund carries above-average overall risk compared to large-cap mutual funds. The fund is benchmarked to the Russell 2000 Index (a small-cap index).
The fund has been closed to new investors at various points in the past. As of Oct. 2018, the fund is open to new investors and requires no minimum initial investment to open an account. The Fidelity Low-Priced Stock Fund has a total expense ratio of 0.62% as of Sep. 28, 2018.
The fund focuses primarily on small- and mid-cap stocks that meet the fund managers' value criteria. These criteria typically include low price/earnings (P/E) multiples, industry leadership, solid cash flow, and strong balance sheets. The fund can invest in any sector and can invest overseas.
Portfolio Composition and Return
As of July 31, 2018, the fund's asset allocation was:
- 9.13% cash
- 53.65% U.S. stocks
- 37.17% non-U.S. stocks
- 0.01% bonds
- 0.04% other
The Low-Priced Stock Fund has a far greater number of holdings than the typical mutual fund. As of Sept. 10, 2018, the fund maintains 953 holdings in its portfolio, with the top 10 accounting for roughly 25% of the fund's total assets. Tillinghast has said that approximately 200 of these positions are very small. Top holdings include UnitedHealth Group, Inc., Ross Stores, Inc., Best Buy Co. Inc., Next PLC and Seagate Technology.