Not Much New at Fidelity Funds

This article is the third in a series about mutual funds.  I previously covered Rydex Funds and Direxion Funds.

Once upon a time, there was a company that was a true pioneer in the mutual fund business.  Their global approach to growth investing (from bygone decades) with the likes of the Magellan Fund (FMAGX) is truly legendary.  In the early 1980s they introduced a series of sector and industry funds known as the Fidelity Select Portfolios.  These products were geared for active traders, with hourly trading and virtually no transaction or redemption fees.  At one point, Fidelity even had “stock baskets” comprised of the top holdings of the more popular Select funds, and those baskets could be shorted.

Somewhere along the way, the mutual fund arm of Fidelity seems to have lost its pioneer spirit.  They added redemption fees to the Select funds as well as most of their international and small cap funds.  Hourly pricing is now just a footnote in history, and 30-day roundtrip rules apply to their entire fund lineup (except money market funds).

Many of these restrictions were put in place just as the ETF business was starting to gain traction.  Some Fidelity watchers, myself included, thought the company was getting ready to enter the ETF business in a big way, with the mutual funds restrictions intended as a way to separate the mutual fund investors from the ETF traders.

No such thing happened, and today Fidelity is noticeably absent from the ETF space.  Yes, they do have one product, the Fidelity Nasdaq Composite Tracking Stock (ONEQ), which seems to only draw attention to the fact that the ETF world has passed them by.  Fidelity recently had a chance to get back in the game in a big way when Barclays decided to sell their iShares unit.  However, it appears they let this chance get away also.

Still, Fidelity is a major force in the mutual fund world.  The company has many fans.  Even though I prefer ETFs over mutual funds, I still have two strategies in my All Star Fund Trader newsletter that limit their selections to Fidelity funds.

Here then, is the latest news regarding Fidelity funds:

The Fidelity Global Commodity Stock Fund (FFGCX) was introduced on March 31, 2009.  The announcement states that the fund is not intended as a direct investment in commodities.  Instead it will invest in the “common stocks” of companies engaged across the commodities spectrum, maintaining a dedicated allocation to each of the metals, agricultural and energy industries. The fund will specifically invest in commodity-producing companies, which are typically more influenced by the performance of raw commodities, rather than companies that operate further up the supply chain (such as mining or energy equipment makers, refiners, distributors, etc).  FFGCX has an expense ratio of 1.75% and there is a 1% redemption fee on shares held less than 30 days.

Fidelity reopened the Fidelity Diversified International Fund (FDIVX) and the Fidelity Small Cap Stock Fund (FSLCX) to new investors and accounts on March 30, 2009.  Fidelity Diversified International Fund, which has been closed since October 2004, seeks capital growth by investing primarily in the common stocks of non-U.S. companies. The fund has been managed by William Bower since 2001.  Fidelity Small Cap Stock Fund, which has been closed since June 2006, seeks long-term growth by normally investing at least 80 percent of its assets in companies with small market capitalization.  Andrew Sassine has managed the fund since July 2008.