Actively managed funds may be out of favor with cost-conscious investors, but that didn't stop Fidelity Investments from making a comeback on that front last year. According to Morningstar’s John Rekenthaler, after years of posting disappointing results, Fidelity's actively managed mutual funds showed signs of improvement in 2017, excluding the flagship Fidelity Magellan.
In terms of the funds that came back strong last year, Morningstar is referring to the Fidelity Contrafund, Fidelity Low-Priced Stock Fund, Fidelity Growth Company Fund, Fidelity Blue Chip Group Fund and Fidelity OTC Fund, all of which did better than their peers. What's more, Rekenthaler noted that Fidelity's major U.S. stock funds beat their index rivals, in some cases by a lot.
“Of course, one year isn't very long," wrote the Morningstar research analyst. "Fidelity's stock funds would need to outdo the indexes for three years at the very least to qualify as long-term successes, and their record during that time period is decidedly more mixed.” Indeed, he noted that for the past three years—despite the strong showing in 2017—the funds “haven't as a group demonstrated their superiority.”
The comeback of sorts for Fidelity's actively managed funds last year comes at a time when some of its other funds aren't doing so well. Take the Fidelity Series Commodity Strategy Fund, which the firm added in 2009 to its Freedom Funds—its set of flagship retirement mutual funds. That fund is down 38% over the past five years. According to Reuters, the Boston-based based investment firm added the Series Commodity Strategy Fund to the mix to give investors the ability to diversify beyond stocks and bonds and to provide a way to protect against inflation. But with inflation weak since then and stocks just ending the 9th year of a bull run, the fund has been underperforming.
Reuters reported that the Series Commodity Strategy Fund—which invests in futures contracts in oil, wheat and hogs—has realized losses of $3.26 billion since 2012. According to Reuters, Fidelity noted that energy prices have plummeted, gold and silver prices have dipped, and the coffee and sugar markets have dealt with periods of oversupply during that time frame.