Fidelity Contrafund | Will Danoff’s Success

$10,000 invested in Fidelity Contrafund on 1990-09-17, has grown to $217,541, 13.1% compound annual return. S&P 500 returned 9.9% p.a. during the span and the average large-cap growth fund – 8.9%p.a. Will Danoff is the manager behind Fidelity Contrafund. On 2015-09-16, he completed 25 years as the fund manager of Fidleity Contrafund with AUM of $103 billion, second only to American Fund’s Growth Fund of America, among actively managed domestic equity mutual funds.

What attributed to Danoff’s success? Danoff seeks companies poised for sustained, above-average earnings growth that isn’t reflected in the valuation of their shares. He uses three tactics along with his expansive mandate to make his fund different from the broader market.

He takes large stakes in what he views as “franchise” companies.

He leans heavily on non-US stocks. In the past, Danoff has allocated as much as 20% of assets to companies aboard.

He maintains a relatively large portfolio of 250 to 500 stocks and keeps portfolio turnover modest. Turnover has been in the 45% to 55% range since 2009.

Morningstar reports that the Contrafund’s upside-downside capture ratio is 93-to-76 for the 15-year period ending 2015-09-30. This implies the Contrafund lagged behind the S&P500 in the up markets, though it earned 93% of the benchmark’s return. Contrafund, however, suffered only suffered only 76% of losses in down markets.

In comparison, the average large-cap growth fund has earned 102% of the S&P 500’s return in up markets but suffered 115% of the losses in down market.

It is also worth noting that the fund has allocated more assets to information technology and it has historically been proven success sector to be in.