Strategic Favorites from Fidelity

Fund expert Jim Lowell, editor of Fidelity Investor, highlights a trio of Fidelity's Strategic funds that rank among his "Best Buys." He also discusses a newly-launched fund that is focused on special situations.

Steve Halpern: Joining us today is mutual fund expert, Jim Lowell, editor of Fidelity Investor. How are you doing, Jim?

Jim Lowell: So far so good, Steve.

Steve Halpern: Although you cover the broad universe of Fidelity funds each month, one feature that you have in your newsletter offers investors your monthly "Best Buy" picks. Could you explain what your goals are with this section?

Jim Lowell: Many of our members follow our four model portfolios, but for members who are looking for, sort of, what I call, a strategic or tactical opportunity in your term trade to capitalize on, maybe an area that's under-represented in their portfolio or even in our overall diversified model portfolios, we have the monthly "Best Buys."

Often times, the picks inside of those monthly "Best Buys" can be there for one, two, three, six months, even longer if the trend holds up, and so, it really is a way for members to be able to fine tune their portfolio month to month, but, sometimes, you don't need fine tuning once you get that good sparkplug put in the engine.

Steve Halpern: Now, this month, among your "Best Buys," you include several funds that are called strategic funds. Could you explain how this particular group of funds fits within the overall Fidelity family?

Jim Lowell: Unique to Fidelity, these funds really take, as their name applies, a strategic approach rather than a fundamental long-term approach to the marketplace and economic environment in which we find ourselves.

So, there is a little bit more trading going on inside of these portfolios; some are more narrowly drawn in terms of their focus, but all tend to have a specific theme relating to them.

One theme is income—whether that's derived from bonds, real estate, commodity linked notes, or for dividend paying stocks, and another, really, is a way for income investors to be able to complement their existing positions with a position that is going to be able to perform relatively well in, what I would call, a growth oriented and potentially rising rate environment.

Steve Halpern: Now, one of your current best buys is Fidelity Strategic Real Return (US:FSRRX). Could you tell us about this fund?

Jim Lowell: You know there...it's funny; when you say real return, what on earth could that mean? You really have to check under the hood of this one, and, for that matter, any fund, because the name is often confusing, if not misleading.

Here I would say it basically is relatively confusing; although, the concept of real return is typically associated with commodities and commodity investing, and commodity investing is typically associated with a hedge against inflation. This is a far more diversified approach to that inflationary theme.

Page 1 | Page 2 | Next Page The expert featured in this column, Jim Lowell, may or may not own positions in any investment vehicle mentioned here. The views and opinions expressed are his or her own.