Cash Levels Suggest Caution at Some Big Fidelity Funds

Wondering who’s been selling all those shares and driving the U.S. market lower in recent months? You can apparently include Fidelity Investments among the culprits.

Fidelity’s latest monthly report on its mutual funds shows that managers of some of its major blue-chip stock funds have been raising cash levels significantly in their portfolios.

The $800-million Fidelity Large-Cap stock fund had 6.3% of its assets in cash as of Sept. 30, up from 4.7% on Aug. 31, Fidelity’s report shows.

Cash levels also rose sharply in September at the $46-billion Fidelity Growth & Income Fund (7.7% of assets Sept. 30 versus 5.9% on Aug. 31), the $13-billion Fidelity Fund (7.5% versus 5.3%) and the $5-billion Fidelity Value Fund (9.1% versus 6.7%).

At the $92-billion Magellan Fund, meanwhile, manager Robert Stansky raised cash levels slightly, to 7.8% from 7.6%. But he had already turned more cautious in summer, ahead of many of his peers.

There are two ways a fund’s cash level can rise: The manager can sell stocks, or he or she can defer investing new money inflows. Either decision, of course, suggests the manager is worried about stocks’ heights.

It’s interesting to note that cash levels declined in September at some of Fidelity’s smaller-stock funds, including the Low-Priced Stock fund (1.3% versus 2.2% in August) and Small-Cap Stock (13.9% versus 17%). That suggests those managers see more bargains than their blue-chip peers.