Fidelity Contrafund Performance vs S&P 500: A Long-Term Analysis

The Fidelity Contrafund has been a top performer in the investment world, but how does it stack up against the S&P 500? Over the past 20 years, the Contrafund has averaged an annual return of 13.1%, significantly outpacing the S&P 500's 9.7% average return.

One key factor in the Contrafund's success is its ability to adapt to changing market conditions. As we'll see in the following analysis, the fund's flexibility has allowed it to navigate even the most turbulent times.

The Contrafund's long-term performance is impressive, with a cumulative return of over 850% since its inception in 1973. In contrast, the S&P 500 has returned around 550% over the same period.

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The Fidelity Contrafund has outperformed the S&P 500 by 225 basis points since 1985, with a CAGR of 13.17% compared to 10.92%.

This impressive outperformance is a result of the fund's ability to generate higher risk-adjusted returns, as evidenced by its Sharpe ratio of 0.69 compared to the S&P 500's 0.55.

The Contrafund has also demonstrated less market correlation, with a correlation coefficient of 0.93 compared to the S&P 500's 0.99, indicating that its performance is less tied to the broader market.

The Contrafund's risk-adjusted performance is a key factor to consider when evaluating its potential as an investment option.

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The Vanguard 500 Index Investor Performance from 1985 to 2022 is a benchmark to compare with other investments. It had a CAGR of 10.92%, which is lower than the Fidelity Contrafund's CAGR of 13.17%.

Investors who put their money in the Vanguard 500 Index Investor would have seen their initial $10,000 grow to $371,919 over the 37-year period. This is a respectable return, but it lags behind the Fidelity Contrafund's performance.

The Vanguard 500 Index Investor had a risk level of 15.34%, which is almost identical to the Fidelity Contrafund's risk level of 15.35%. This means that both investments offered a similar level of volatility to investors.

The Sharpe Ratio for the Vanguard 500 Index Investor was 0.55, which is lower than the Fidelity Contrafund's Sharpe Ratio of 0.69. This indicates that the Fidelity Contrafund offered a higher rate of risk-adjusted returns.

The Market Correlation for the Vanguard 500 Index Investor was 0.99, which is higher than the Fidelity Contrafund's Market Correlation of 0.93. This means that the Vanguard 500 Index Investor was more closely tied to the overall market performance.

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Comparing investments can be a daunting task, but it doesn't have to be. By looking at key metrics, you can make informed decisions about which investments are right for you.

One important metric to consider is risk-adjusted performance. This measures an investment's returns in relation to its risk, giving you a more accurate comparison of different options.

For example, a comparison of Fidelity Contrafund Fund (FCNTX) and Vanguard S&P 500 ETF (VOO) shows that FCNTX has a higher maximum drawdown (-48.74%) than VOO (-33.99%). This means that FCNTX has experienced larger losses in the past.

FCNTX also has a higher expense ratio (0.39%) compared to VOO (0.03%). This could impact your returns over time.

Dividend yield is another important consideration. VOO has a significantly higher dividend yield (1.26%) than FCNTX (0.08%). This could be a key factor in your investment decision.

Here's a comparison of FCNTX and VOO's dividend yields over the past few years:

Finally, consider the volatility of each investment. FCNTX has a higher volatility (5.03%) compared to VOO (4.64%). This means that FCNTX's price has experienced larger fluctuations in the past.

By looking at these key metrics, you can make a more informed decision about which investment is right for you.

Looking for the best Fidelity mutual funds to buy and hold? Consider the Fidelity Contrafund, which has consistently delivered strong returns over the long term.

The fund's impressive track record can be attributed to its diversified portfolio, which includes a mix of growth and value stocks. With a low expense ratio of 0.73%, it's a cost-effective option for investors.

Fidelity's Growth Company fund is another solid choice, with a 10-year annualized return of 14.35%. Its focus on growth stocks has helped it outperform the market during periods of economic expansion.

However, it's essential to note that growth stocks can be more volatile than other types of investments. This fund may not be suitable for investors seeking stable returns.

The Fidelity Blue Chip Growth fund has a more conservative approach, with a focus on established companies with a history of stable growth. Its 10-year annualized return of 12.45% is still impressive, and its expense ratio is a low 0.85%.

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Fidelity Contrafund has outperformed the S&P 500 by an impressive 225 basis points since 1985, with a CAGR of 13.17% compared to 10.92%.

This outperformance is not just a result of a single decade, as the fund has consistently beaten the S&P 500 over the past 20 years, with a 14.27% annualized return over the past 10 years compared to the 13.27% return of the S&P 500.

The fund's Sharpe ratio is also a notable metric, with a current value of 2.27, which is comparable to the S&P 500's Sharpe ratio of 1.92.

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Drawdowns are a key aspect of evaluating investment performance.

A drawdown measures the decline in value of an investment from its peak to its trough, providing a clear picture of how much an investment has fallen.

Drawdowns can be expressed as a percentage of the investment's original value, making it easier to compare different investments.

A drawdown of 20% means the investment has fallen by 20% from its peak value.

Understanding drawdowns is crucial for investors, as it can help them gauge the risk of an investment and make more informed decisions.

Drawdowns can be used to evaluate the performance of different investment strategies, allowing investors to compare their effectiveness.

For example, a drawdown of 15% is generally considered more manageable than a drawdown of 25%.

Drawdowns can also be used to identify potential risks in an investment portfolio, helping investors to diversify and reduce their exposure to risk.

A drawdown of 10% or less is often considered a sign of a well-managed investment portfolio.

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Low costs are a strong predictor of future mutual fund returns. In fact, every single time period and data point tested showed that low-cost funds beat high-cost funds.

Russell Kinnel, the director of research at Morningstar, agrees that expense ratios are a key factor in making a better decision. He found that in every asset class over every time period, the cheapest quintile produced higher total returns than the most expensive quintile.

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It's not just about the expense ratio, but also about its impact on performance. Low-cost funds have consistently outperformed high-cost funds, making it a crucial metric to consider.

Past performance is not a reliable predictor of future returns. In fact, a study by SPIVA found that only poor past performance is predictive, and even that is not reliable.

The data shows that very few funds can consistently stay at the top. Only 3.78% of funds that were in the top quartile in 2012 managed to stay there by 2014.

In contrast, low costs are a consistent and reliable predictor of future returns. It's a metric that you can take to the bank, according to Russell Kinnel.

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Correlation is a crucial aspect of investment performance. The correlation between Fidelity Contrafund (FCNTX) and Vanguard 500 Index Investor (VOO) is 0.93, which is considered to be high.

This indicates a strong positive relationship between their price movements. A high correlation between two investments can signal a lack of diversification, potentially leading to increased risk during market downturns.

FCNTX and VOO have a correlation of 0.93, which is a significant factor to consider when building a portfolio. Having highly-correlated positions may not be ideal, as it can increase risk during market fluctuations.

The correlation between these two investments is an important metric to examine, especially for those looking to minimize risk. By understanding the correlation, investors can make more informed decisions about their portfolio composition.

Alpha Calculation is a crucial metric that helps investors understand a fund's performance beyond just its market exposure.

RPV's alpha was negative, indicating that the value-focused strategy was implemented poorly.

Management fees, market impact, and transaction costs can't fully explain the -5.7% result.

Investors would have been better off buying the S&P 500 and factor exposures through a zero-cost ETF and risk premia indices, respectively.

FCNTX, Fidelity Contrafund, declined by more than 20% due to beta and factor exposure over the last 12 months.

The S&P 500 and equity factors can't fully explain the negative performance, indicating a negative alpha.

The fund manager must take responsibility for at least some of the losses.

To conduct a thorough investment analysis, you can start by comparing stocks, funds, or ETFs for a quick overview.

You can search for stocks, ETFs, and funds for a quick comparison or use the comparison tool for more options.

Investors can use online resources to compare the performance of various investment options, including the Fidelity Contrafund and the S&P 500.

The comparison tool can provide a side-by-side comparison of different investment options, helping you make informed decisions.

To get started with your investment analysis, simply search for the investment options you're interested in and use the comparison tool to get a quick snapshot of their performance.

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