Key Morningstar Metrics for Fidelity Growth Company
- Morningstar Medalist Rating: Silver
- Process Pillar: Above Average
- People Pillar: High
- Parent Pillar: Above Average
Fidelity Growth Company’s FDGRX outstanding leadership continues to be a big advantage, but the fund is vulnerable if chip vendor Nvidia NVDA—a key position here—fails to meet the market’s high expectations.
The stock is riskier than most. Although the company is in outstanding financial health, its valuation today hinges on the nascent and skyrocketing artificial intelligence GPU end market, where the emergence of alternatives or intensified competition are plausible concerns, according to Morningstar’s equity analyst team. Nvidia’s business has historically been prone to boom-and-bust cycles that have rocked its share price.
But this fund has never presented itself as tame. Wymer has long been willing to embrace profitless firms he thinks possess exceptional growth potential—notably in the biotech industry—which can subject it to steeper drops than the Russell 1000 Growth Index (the category benchmark) during market pullbacks. Although many of those budding hopefuls have petered out over the years, Wymer has shown a knack for spotting and successfully investing early in big winners.
The fund’s heft is a disadvantage in that it limits Wymer’s ability to nimbly trade or hold big positions in names he favors without exceeding ownership limits. Even so, the fund, which has long been closed to most new investors, remains exceptional.
Fidelity Growth Company: Performance Highlights
Wymer’s penchant for fast-growers and his willingness to hang on to relatively pricey fare has upped the fund’s volatility, as measured by standard deviation, relative to peers and the benchmark. Still, the fund has typically posted benchmark-beating risk-adjusted results.
The fund’s relative performance has been remarkably consistent under Wymer. Since his start, its monthly rolling three-year returns have beaten the bogy 90% of the time and have ranked in the category’s top quartile nearly as often.
On the other hand, the strategy’s above-index biotech stake has fared poorly over the past half-decade as the industry has posted meager returns—or losses in the case of smaller-cap biotechs like the ones this fund traffics in.
