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Contrafund: A Fidelity All-Star

Originally launched in 1967, Fidelity Contrafund, Fidelity's largest stock mutual fund, has earned the maximum five stars from Morningstar.
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NEW YORK (TheStreet) -- The recent market turmoil has not only taken its toll on individual investors, but also many of the largest and most prominent U.S. equity-based mutual funds around. One shining exception to the norm, however, has been the Fidelity Contrafund (FCNTX) - Get Report. In 2010, FCNTX is listed as one of only two products among the 10 largest U.S. stock mutual funds which are beating their benchmarks this year.

Originally launched in 1967, Fidelity Contrafund has earned the maximum five stars from

Morningstar

(MORN) - Get Report

. The current brain behind this product's success, William Danoff, has been at the helm since the latter half of 1990.

Today, with $63 billion in assets, FCNTX holds the title of being Fidelity's largest stock mutual fund.

The Contrafund's claim to fame is its ability to pick out domestic companies with value that the fund manager feels is not fully recognized by the public. While in the past, the fund tracked a collection of companies hailing from across the stylebox spectrum, Danoff has since shifted the fund's approach to focus most heavily on large-cap, growth-oriented companies. Still, the fund manager sets aside a small portion of his assets for small and medium-cap firms.

As of the close of April 2010, the fund's sector distribution was heavily weighted toward the technology industry which accounts for over 30% of the fund. Other top sectors include consumer discretionary, healthcare and financials, which together make up another 40% of the fund's portfolio.

FCNTX is noticeably underweighted in utilities and telecommunications, which combined account for less than 0.5% of the fund's portfolio.

Boasting more than 400 individual holdings, the vast majority of the names underlying FCNTX represent only minor slices of the fund's portfolio. There are, however, some firms that do command large slices of Contrafund's portfolio. Making up more than 20% of the fund's total assets,

Apple

(AAPL) - Get Report

,

Google

(GOOG) - Get Report

,

Berkshire Hathaway Class A Shares

(BRK.A) - Get Report

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,

Wells Fargo

(WFC) - Get Report

and

McDonald's

(MCD) - Get Report

are listed as the fund's five largest positions.

Considering that this fund is actively managed, investors needn't worry about the fund's direction changing drastically, but the current turnover rate is 58%.

Investors are charged 1.01% to hold the fund. FCNTX carries no load.

Surviving and performing well in nearly any type of market has been one of the most endearing qualities of FCNTX. In times of market euphoria, however, it is not unusual for the fund to lag.

In a

CNN Money

article highlighting Contrafund, the reporter compares the fund's performance to that of large-cap growth stocks during the tech bubble of 1997-1999 and the post bubble period starting in 2000. During the times of exuberance, FCNTX underperformed large growth stocks by 10 percentage points a year. However, in the two years that followed the bubble's burst, the Fidelity fund dramatically outperformed the benchmark by 12 points a year.

The popularity of Contrafund has not gone unnoticed. In 2006, the fund had garnered so much attention and new money that it was forced to close its doors to new investors. However, in light of the market downfall, the fund reopened in late 2008. For now, investors can still gain access to this popular product.

Don Dion is president and founder of

Dion Money Management

, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.