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Rating:Fidelity Fund Eyes Benchmark Switch Not Rated 2.0 Email Routing List Email & Route  Print Print
Tuesday, March 21, 2006

Fidelity Fund Eyes Benchmark Switch

by: Armie Margaret Lee

Fidelity's Blue Chip Growth Fund is seeking to tie itself to the Russell 1000 Growth Index, according to The Wall Street Journal. The fund, currently benchmarked to the Standard & Poor's 500-stock index, will seek the blessing of shareholders for the switch in May.

If approved, the migration to the Russell 1000 Growth Index could spell changes in the management fees for the fund, which has $22 billion in assets. The plan to change benchmarks has already been greenlighted by the fund's board of trustees.

Sophie Launay, a spokesperson for Fidelity Investments, told the paper that the use of the Russell 1000 Growth Index as the fund's main performance benchmark will "help communicate to investors more clearly the fund's large-cap growth focus."

If the proposed change pushes through, there won't be a reallocation of investments, but it is unclear whether the shift will result in higher management fees, Launay said. Among the fund's top-five holdings are Microsoft, General Electric and Johnson & Johnson, all of which are closely aligned with the composition of the Russell 1000 Growth Index.

The fund has trailed the S&P 500 over the last few years, noted Morningstar analyst Dan Lefkovitz. The fund's trailing return, he said, was 1.3 percent, compared with the S&P 500's 4.33 percent gain. The Russell 1000 Growth Index, meanwhile, returned 1.49 percent.

 

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