The Equal-Weighted S&P Index (RSP) has returned 14% and 9%, on average, annually, over the past three and five years.

In this column, I’m going to describe three mutual funds that have not only soundly beat those numbers, but just to assure that they are continuing their winning ways, all three have generated double-digit year-to-date returns.

 While past results don’t necessarily predict the future, these three funds have a reasonable shot at future outperformance. 

All are no-load funds, meaning there are no sales commissions and have no minimum investment requirements. So they are buyer friendly. All three are Fidelity funds because they were the only funds meeting my performance requirements that weren’t targeted to institutional investors and requiring $100,000 opening balances. In fact, all three have no minimum opening investment requirement.

If you’d rather buy individual stocks than mutual funds, I’ve included each fund’s top five holdings. Here are the funds. All return data mentioned here is as of June 28.

Fidelity New Millennium (FMILX): Holds both growth and value-priced stocks in a variety of sectors, although tech stocks account for 27% of holdings. Biggest holdings include Apple (AAPL), Microsoft (MSFT), Exxon Mobil (XOM), Alphabet (GOOG), and Eli Lilly (LLY). With a portfolio annual turnover rate of only 12%, this fund follows and buy and hold strategy. The fund had returned 14% year-to-date, and averaged 21% and 11% annually over the past three and five years. Dividend yield is 1.5%.

Fidelity Select Leisure (FDLSX): Consumer cyclicals (retail stores and lodging) account for 94% of portfolio holdings. Not buy and hold, this fund, with a 46% annual portfolio turnover rate, holds mostly mid-to large-cap growth stocks. Its five biggest holdings include McDonald’s (MCD), Booking Holdings (BKNG), Starbucks (SBUX), Hilton Worldwide (HLT) and Yum Brands (YUM). The fund has returned 18% year-to-date, and averaged 21% and 12% annually over the past three and five years. Dividend yield is 0.4. 

Fidelity Select Construction & Housing (FSHOX): Consumer cyclicals, at 52%, and industrials at 29%, dominate the portfolio. Also a long-term player, its portfolio turnover ratio is only 20%. Its two biggest holdings, Home Depot (HD) and Lowes Companies (LOW) together account for 33% of the total portfolio. They are also its longest term holdings: Home Depot was added to the portfolio in April 1988 and Lowes was added in August 2005. Filling out the top five are Johnson & Johnson (JNJ), Trane Technologies (TT) and Invitation Homes (INVH. The fund has returned 17% year-to-date and averaged 31% and 17% annually over three and five years. Dividend yield is 0.8%. 

Those are my ideas. As always, past performance doesn’t necessarily predict future returns. Do your own due diligence. The more you know about your investments, the better your returns.  

7/10/23