Is Fidelity Multi-Asset Index (FFNOX) a Strong Mutual Fund Pick Right Now?

Looking for a Allocation Balanced fund? You may want to consider Fidelity Multi-Asset Index (FFNOX) as a possible option. While this fund is not tracked by the Zacks Mutual Fund Rank, we were able to examine other factors like performance, volatility, and cost.

Objective

FFNOX is one of many Zacks' Allocation Balanced mutual funds to pick from. Allocation Balanced funds seek to invest in a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation. Investors utilize Allocation Balanced funds as a way to get a good start with diversified mutual funds, as well as for core holdings in a portfolio of funds.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FFNOX. Fidelity Multi-Asset Index debuted in July of 1999. Since then, FFNOX has accumulated assets of about $10.55 billion, according to the most recently available information. The fund is currently managed by Andrew Dierdorf who has been in charge of the fund since January of 2009.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 8.74%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 15.6%, which places it in the top third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. The standard deviation of FFNOX over the past three years is 10.84% compared to the category average of 8.79%. The fund's standard deviation over the past 5 years is 13.42% compared to the category average of 10.63%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 0.83, the fund is likely to be less volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. Over the past 5 years, the fund has a negative alpha of -2.48. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, FFNOX is a no load fund. It has an expense ratio of 0.08% compared to the category average of 0.72%. FFNOX is actually cheaper than its peers when you consider factors like cost.

This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.

Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.

Bottom Line

For additional information on the Allocation Balanced area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into FFNOX too for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.

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This article originally published on Zacks Investment Research (zacks.com).

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