3 Fidelity Funds To Buy As Lyft Prepares For IPO

Ride-sharing company, Lyft will be going public on Mar 29 on the Nasdaq under the ticker “LYFT.” Further, the company is expected to announce share price on Mar 28.

Lyft raised its expected IPO share price range to $70-$72 per share under its new filing on Mar 27. This would take the company’s valuation to around $20 billion. Previously, Lyft had an expected IPO share price range of $62-$68.

Lyft’s IPO is set to be a huge success given the company’s high-growth business model. In its IPO Prospectus on form S-1, Uber’s rival had stated, “Lyft started a movement to revolutionize transportation… We believe that the world is at the beginning of a shift away from car ownership to Transportation-as-a-Service, or TaaS.”

This year started off on a strong note for U.S. equities and the S&P 500 in particular has gained 11.9% year to date. Such favorable conditions make it ideal for companies to go public and this is evident from the fact that the first three months of this year have seen a wave of IPOs with big names like Uber and Pinterest set to go public later in the year.

Furthermore, a host of mutual funds are already invested in the company and parking one’s money in such funds at this point seems prudent.

Fidelity Funds to Benefit From Lyft IPO

Due to high profitability and easy liquidity, mutual fund managers have been eyeing startups as potential investments for long. Further, startups have gathered steam lately by raising big bucks in private markets. This, in part, influenced their decision to delay going public in order to strengthen their footing in the industry by remaining private as well as avoiding the “hassles of going public.”

However, not all startups believe that going public is troublesome. Of course, the legalities involved in any IPO can be grueling. Having said that, raising huge sums of money is not an easy task and the sheer benefits of the same is worth the ‘inconvenience.’ As a matter of fact, Fidelity’s mutual fund managers have already poured in significant amount of money in the soon-to-be-public Lyft.

A class of Fidelity funds had invested in the H-series funding round of Lyft that occurred on Nov 22, 2017. The fund house had acquired shares valued $39.74 each. Some other funds from Fidelity also participated in the I series round on Jun 27, 2018, buying shares at $47.35 each. As of January 2019, Fidelity’s stake in Lyft stands at $46.93 a share.

3 Best Mutual Funds to Buy Now

Given the positives, we have highlighted three mutual funds holding stakes in Lyft and are poised to gain significantly from the ride-sharing company’s IPO. These funds also carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000.

We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.

The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Fidelity Advisor Growth Opportunities Fund Class M FAGOX seeks appreciation of capital. The fund invests primarily in common stocks of companies which have above-average growth potential. FAGOX invests in securities of both U.S. as well as non-U.S. based companies.

This Sector- Large Cap Blend product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FAGOXhas a Zacks Mutual Fund Rank #1 and an annual expense ratio of 1.28%, which is below the category average of 1.29%. The fund has three and five-year returns of 26.3% and 14.5%, respectively.

Fidelity Advisor Series Growth Opportunities Fund FAOFX seeks growth of capital by investing primarily in common stocks. The fund invests in securities of only those companies which the Fidelity Management & Research Company (FMR) believes have above-average growth potential. FAOFX securities of both U.S. as well as non-U.S. based companies.

This Sector- Large Cap Growth product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FAOFXhas a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.01%, which is below the category average of 1.07%. The fund has three and five-year returns of 28% and 15.8%, respectively.

Fidelity Advisor Diversified Stock Fund Class O FDESX seeks growth of capital by investing the majority of its assets in common stocks. FDESX invests in either growth or value stocks or both. The fund invests in securities of both U.S. as well as non-U.S. based companies.

This Sector- Large Cap Blend product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FAGOXhas a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.47%, which is below the category average of 0.95%. The fund has three and five-year returns of 16.5% and 9%, respectively.

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