Fidelity Portfolio Managers: Types, Approaches, and Investment Options

Fidelity portfolio managers offer a range of investment options to suit various financial goals and risk tolerances.

They provide actively managed funds, which are guided by experienced portfolio managers who make investment decisions based on market trends and economic conditions.

Some portfolio managers specialize in specific asset classes, such as equities, fixed income, or alternative investments.

Fidelity's portfolio managers also offer index funds, which track a particular market index, such as the S&P 500, to provide broad market exposure.

Portfolio managers generally fall into one of two categories: active or passive. Active portfolio managers attempt to consistently beat average market returns through a hands-on approach, involving frequent buying and selling. Their experience levels tend to be high, and their investment style directly results in the fund's returns.

Passive portfolio managers, on the other hand, take a hands-off approach and mirror a specific market index. This means their investment strategy is based on the performance of the index, and they aim to match its returns over the long term. Investors should expect to see similar returns if they choose a passive fund.

A key difference between active and passive managers is their goal: active managers aim to outperform the benchmark, while passive managers aim to match it.

Portfolio managers can be broadly categorized into two types: active and passive.

Active portfolio managers attempt to consistently beat average market returns by using a hands-on approach, which involves frequent buying and selling.

Passive portfolio managers, on the other hand, take a hands-off approach and mirror a specific market index.

Most portfolio managers have at least an undergraduate degree in finance or another related field.

Here's a comparison of the two types of portfolio managers:

A three-fund portfolio is based on the fundamental asset classes, stocks and bonds. It's assumed that cash is not counted within the investment portfolio, so it's not included.

You should hold both domestic and international stocks in your portfolio, as this provides a more diversified investment. This is a key principle of a three-fund portfolio.

To establish a three-fund portfolio, you need to decide how much of each asset class to hold. This is known as your asset allocation.

You have three basic non-cash assets to consider: domestic stocks, international stocks, and bonds. You'll need to choose a mutual fund for each of these asset classes.

The three-fund portfolio approach involves rebalancing occasionally, typically annually, to maintain the desired percentage mix of assets. This is because different assets grow at different rates, so it's necessary to rebalance to keep your portfolio aligned with your investment goals.

Here's a simple breakdown of the three-fund portfolio:

This is a simplified example, but it illustrates the basic idea behind a three-fund portfolio. By holding these three funds, you can create a diversified investment portfolio that aligns with your investment goals.

Fidelity provides a full spectrum of models to help you and your clients work toward certain investment objectives, like generating income or seeking enhanced total return. These models cater to various needs and goals, allowing you to tailor your approach to each client's unique situation.

You can choose from a range of models that focus on generating income, such as Fidelity Custom Model Portfolios, which are designed to help firms scale their practice while offering tailored solutions.

To be a successful portfolio manager, you need a range of skills. These include communication, research and analytical skills, risk management, portfolio construction, and the ability to work independently and with others.

A good portfolio manager should possess specific qualities, such as ideation, which is the ability to have original investment insight. They should also be able to conduct thorough research, whether active or passive, and have strong communication skills.

Some of the key characteristics of a good portfolio manager include the ability to work independently and with others, risk management, and the ability to construct and manage investment or financial portfolios. They should also be able to communicate effectively with investors and make adjustments to portfolios through rebalancing at regular intervals.

Here are some key skills that are essential for a portfolio manager:

To be a successful portfolio manager, you'll need a range of skills, including communication, research and analytical skills, risk management, portfolio construction, and the ability to work independently and with others.

Communication skills are crucial, as portfolio managers need to effectively communicate with investors and other stakeholders.

Research and analytical skills are also essential, as portfolio managers need to conduct thorough research and analysis to make informed investment decisions.

Risk management is another key skill, as portfolio managers need to be able to identify and mitigate potential risks to the portfolio.

Portfolio construction is also a critical skill, as portfolio managers need to be able to create and manage investment portfolios that meet the needs and goals of their clients.

Some of the specific skills that portfolio managers need include the ability to work independently and with others, as well as the ability to construct and manage investment portfolios based on their investment style.

Here are some of the key skills that portfolio managers need to possess:

As a seasoned investor, you want a portfolio manager who brings a wealth of experience to the table. Fidelity, for instance, has been entrusted with $4.4T in assets under management.

Having such a large amount of assets under management gives Fidelity a unique quantitative and research expertise that informs their asset allocation and investment selection for their model portfolios.

This expertise is invaluable, especially when it comes to navigating complex investment decisions.

Portfolio managers earn a salary that depends on the company they work for, the city/location, their experience, and the type of portfolio they manage, with an average base pay ranging from $88,000 to $149,000 per year.

Their base salary can vary greatly depending on the company, location, and experience, and may not reflect their total earnings.

Portfolio managers are included under the financial managers category in the Bureau of Labor Statistics (BLS) handbook, and the median salary for these professionals in 2023 was $156,100 per year.

In addition to their base salary, portfolio managers may also receive bonuses, commissions, benefits, and stock options as part of their compensation package.

These additional forms of compensation can significantly increase a portfolio manager's take-home pay, especially if they meet their annual goals.

Fidelity offers a range of products and services to help portfolio managers scale their practice and offer tailored solutions to their clients.

Fidelity Custom Model Portfolios can be a great way to stand out in the industry, allowing portfolio managers to create solutions that cater to their firm's unique preferences.

Custom model portfolios can help portfolio managers offer a more personalized experience to their clients, while also streamlining their workflow.

Fidelity offers a variety of products, including Fidelity Advisor Mutual Funds, Fidelity Mutual Funds, and Fidelity ETFs, among others.

Here are some of the products and services offered by Fidelity:

Fidelity offers a range of products to help you manage your portfolio. These include Fidelity Advisor Mutual Funds and Fidelity Mutual Funds.

You can also use Fidelity ETFs, which are a type of exchange-traded fund that can provide diversification and flexibility.

Their Money Market Funds are designed to provide a low-risk investment option, while Model Portfolios offer a pre-built investment strategy tailored to your firm's preferences.

You can also consider Separately Managed Accounts, which allow for customized investment management. 529 College Savings Plans are another option, designed to help you save for education expenses.

Commingled Pools and Variable Insurance Products are also available, offering flexible investment options. Fidelity Stable Value Portfolios provide a low-risk investment option with a competitive return.

Here are some of the products Fidelity offers, categorized for easy reference:

Mid-cap stocks are often considered the "sweet spot" of equity investing, potentially offering greater long-term returns than large caps with less risk than small-cap stocks.

The Fidelity Mid-Cap Stock (FMCSX) is a top pick for 2024, with a price-to-earnings (P/E) ratio of 15.7, compared to the S&P 500's 24.8.

Mid-cap stocks are more cyclical and sensitive to economic weakness, but their current cheapness and sensitivity to recovery make them a good alternative to large-cap stocks.

The Fidelity Mid-Cap Stock is top-heavy in industrials (25%) and financials (16%), with consumer discretionary stocks (12%) coming in third.

The fund's biggest holdings include oil exploration and production company Imperial Oil (IMO) and Calvin Klein parent PVH (PVH).

FMCSX's trailing return ranks in the top decile of mid-cap blend funds for the 15-year time frame and in the top quartile for the five-year and 10-year time frames.

Here's a breakdown of the fund's holdings:

This diverse mix of holdings helps to minimize risk and maximize potential returns.

The Fidelity Strategic Dividend and Income Fund is one of the best actively managed Fidelity funds for those looking to mitigate inflationary risks with income earned from investments. It achieves this by investing at least 80% of fund assets across four general investment categories.

The fund's strategy focuses on companies that currently pay dividends and have the potential for future growth, which tends to arrive at a selection of value stocks. Top holdings at present include consumer products giant Procter & Gamble (PG), soft drinks maker Coca-Cola (KO), and logistics REIT Prologis (PLD).

The Fidelity Equity-Income Fund is also a great option for investors looking for a fund that can produce income from dividends and avoid the worst of short-term market risk while accomplishing long-term growth. This actively managed fund has historically achieved above-average returns while taking on a reasonable amount of market risk.

The fund managers focus on market sectors, such as financials (21%), industrials (13%), and healthcare (12%), that have a combination of a value tilt and defensive nature at the same time. Quality long-term holdings like Exxon Mobil (XOM), JPMorgan Chase (JPM), Danaher (DHR), and Bank of America (BAC) are included in the fund's portfolio.

Here are some key details about the Fidelity Equity-Income Fund:

Fidelity provides a range of options to help you manage your client portfolios, including model portfolios with no advisory fees.

These model portfolios can align to your preferences and your clients' needs, thanks to open architecture capabilities that incorporate a variety of managers.

Fidelity offers a full spectrum of models to help you work toward certain investment objectives, such as generating income or seeking enhanced total return.

Vanguard Funds are a popular choice for investors, and for good reason. They offer a range of low-cost index funds that can be combined to create a diversified portfolio.

One of the most well-known Vanguard fund portfolios is the "three-fund portfolio", which consists of the Vanguard Total Stock Market Index Fund (VTSAX), the Vanguard Total International Stock Index Fund (VTIAX), and the Vanguard Total Bond Market Fund (VBTLX). This portfolio can be allocated in various ways, such as 42% Total Stock Market Index, 18% Total International Stock Index, and 40% Total Bond Market fund.

You can also use ETFs instead of mutual funds, which can be a more cost-effective option. For example, you could use the Total Stock Market ETF (VTI), the Vanguard Total International Stock Index Fund (VXUS), and the Vanguard Total Bond Market ETF (BND).

Here are some sample three-fund portfolios to consider:

These allocations can serve as a starting point for your own investment strategy, and you can adjust them based on your individual needs and risk tolerance.

Investing in the right asset classes is crucial for a diversified portfolio. Domestic Equity is a great option for those who want to invest in the local market.

You can also consider investing in Money Market, which is a low-risk option that provides liquidity. International Equity is another option for those who want to invest in foreign markets.

Sector/Industry investments allow you to focus on specific areas of the market, such as technology or healthcare. Fixed Income: High Income investments provide regular income, but with a higher risk.

Fixed Income: Investment Grade investments offer a balance between income and risk. Asset Allocation involves spreading investments across different classes to minimize risk.

Here are the main asset classes to consider:

Fidelity offers a range of options to suit different investment needs and preferences.

You can choose from a variety of managers to align with your clients' needs and have no advisory fees.

Fidelity's model portfolios can be used to manage client portfolios and come in a full spectrum of models to help you work toward certain investment objectives.

Some common investment objectives include generating income or seeking enhanced total return.

Open architecture capabilities allow Fidelity's model portfolios to incorporate a broad variety of managers and align to your preferences and your clients' needs.

Here are some examples of three-fund portfolios that you can use as a starting point:

These are just a few examples of the many options available to you. It's always a good idea to do your own research and consult with a financial advisor before making any investment decisions.

The Fidelity Equity-Income Fund (FEQIX) is a great option for investors looking to balance income generation with long-term growth. This actively managed fund focuses on value stocks with a defensive nature, such as financials, industrials, and healthcare.

Its top holdings include quality stocks like Exxon Mobil, JPMorgan Chase, Danaher, and Bank of America, which offer a combination of value tilt and defensive characteristics. These companies have historically provided above-average returns while taking on a reasonable amount of market risk.

The fund's primary objective is to invest in dividend stocks that yield higher than the average yield of the S&P 500, with a secondary objective of capital appreciation. This means investors can expect to earn income from dividends and potentially avoid the worst of short-term market risk while achieving long-term growth.

Here are some key statistics about FEQIX:

With its focus on value stocks and defensive sectors, FEQIX is well-positioned to navigate elevated inflation and rising interest rates. As Kiplinger economist David Payne notes, the lack of progress on inflation means the Federal Reserve is unlikely to cut interest rates anytime soon, making value stocks an attractive option.

If you're looking to diversify your portfolio in 2025, emerging markets funds are definitely worth considering. The Fidelity Emerging Markets Fund (FEMKX) is a top choice, with $8.9 billion in assets under management.

This fund has a diversified portfolio, with a focus on Asia, particularly China, India, and Taiwan. The top sectors in the fund are technology, financials, and consumer discretionary.

One of the key benefits of emerging markets funds is their potential as an inflation hedge. Historically, emerging markets have performed well in inflationary environments, thanks to high demand from developed nations.

The FEMKX fund has a strong track record, outperforming more than 80% of emerging markets funds over the past five years and 98% over the past decade. Its long-term performance has been above category average.

Here are some key stats about the FEMKX fund:

Overall, the Fidelity Emerging Markets Fund is a solid choice for investors looking to add some diversity to their portfolio.