In the Nov 21, 2016 issue of the New Yorker magazine, Fidelity ran this ad:
With an annualized total return of 14.5% over 30 years (1985 – 2015), and a very low risk coefficient, this “Consumer Staples” sector looks like a perfect investment. What to do?
- Sell everything and buy just FDFAX?
(FSTA is only 2.5 years old – they should not have included it in the ad.)
- Begin adding FDFAX to the portfolio?
- Do Nothing – because S&P500 performs better than FDFAX
The correct action is #3. The S&P500 did outperform FDFAX over the same 30 year period. Here’s proof
The green line is the S&P500. As we know, VTI has been outperforming the S&P500 . So, do nothing is the correct action.