Healthcare, Japan and Diversified Pacific/Asia funds dominated the top-performing Fidelity funds for the first quarter of 2015, according to a report released by Fidelity’s Asset Allocation Research Team or AART. Fidelity Investments remains one of the largest mutual fund companies worldwide, boasting more than $1,740.6 billion of mutual fund assets under management as of Sept 30, 2014.
Volatile Fourth Quarter
AART noted that S&P increased by 0.4 percent and NASDAQ also advanced by 3.5 percent. Japan and healthcare mutual funds advanced by 10.9 percent and 10.7 percent, respectively. Diversified Pacific/Asia and India Equity and Small growth followed closely. However, the report said that the volatility seen in the fourth quarter may extend up to 2015. The slump in oil prices, lower bond yields and exchange-rate fluctuations brought by the increasing U.S. dollar may continue to create volatility in the market for 2015. On the other hand, the situation proved to be advantageous for those in the active management.
“Correlations among U.S. equity returns remain in a multi-year down trend, which is positive for active management, and there may be further opportunities for active management in 2015 if economic and policy divergences continue,” the report said.
“The yield curve remains historically steep, particularly in short- to intermediate-duration bonds where the potential to earn additional roll return can help to provide a cushion from a potential Fed rate hike,” the report stated.
Nevertheless, Fidelity still views diversification as the most worthy of consideration in terms of market strategy. Fidelity noted that diversifying investments by 70 percent in the US and 30 percent in international diversified portfolio brings “higher returns, lower volatility, and better risk-adjusted returns than the S&P 500 over the long run.”
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