Fund in Focus: Fidelity Global Growth Portfolio

FundGrade A+® Award winner

Like other Fidelity portfolio products, the Fidelity Global Growth Portfolio is structured like a fund of funds with managers Geoff Stein and David Wolf allocating assets among different Fidelity funds and ETFs across a mix of asset classes.

Ths fund is focused on growth, with a target asset mix of 85% equities and 15% fixed income. At the end of November, it was slightly overweight equities, which sat at roughly 86% and carried a cash balance of slightly over 3%.

In a quarter-end commentary, Fidelity managers David Wolf and David Tulk noted that equity markets look expensive by most standards. They added, “But it’s not clear how much any of that really matters much to the broad market trend at this point. Governments around the world are spending and borrowing aggressively and central banks are effectively monetizing this. That money has to go somewhere. And equities don’t have much competition for those funds.”

As a result, the managers say they are “diversifying away from nominal bonds in the defensive components of our multi asset class funds in favour of the real assets that should be better able to provide both appreciation and protection in a world of near-zero interest rates and prospectively higher and more volatile inflation.”

While the fund’s higher-than-average equity weight dampened performance earlier in the year during the March market meltdown, it has certainly helped in the recent rebound, as the fund has dramatically outperformed both the index and the peer group.

Year to date to Nov. 30, the fund is ahead 11.7%, outpacing both the benchmark and peer group. This trend of outperformance is not just a short-term event. The longer-term numbers have held up very well. The fund has finished in the first quartile every calendar year for the past 10 years. It duplicated that performance in annualized returns, turning in first quartile performance for every time period for past 10 years. For example, 5-year average annual compounded rate of return is 8.1% to Nov. 30, while 10-year annualized return is 10.3%. A key reason for this outperformance is its higher-than-average equity weight. Drilling deeper, most of the equity exposure has had a growth tilt, which has outperformed.

I believe this fund is well positioned. First, it has an excellent management team at the helm who have been very adept in setting the asset mixes across the full range of Fidelity multi-asset funds. David Wolf has worked at the Bank of Canada and has insight into its inner workings, which will likely be a positive in such in uncertain times. Finally, Fidelity has an extensive stable of well-respected, managers across a wide range of asset classes and investment styles.

Fidelity Global Growth Portfolio
Fund company: Fidelity Investments Canada
Fund Type: Global Equity Balanced
FundGrade: A (November)
FundGrade A+ Awards: 2014, 2015, 2018, 2019
Style: Top-down asset mix; Bottom-up security selection
Risk level: Medium
Load status: Optional
RRSP/RRIF suitability: Excellent
Managers: Geoff Stein since March 2012, David Wolf since Feb. 2015
MER: 2.27%
Fund codes: FID2206 (Front-end load)
Minimum Investment: $500

Dave Paterson, CFA, is a money manager and an expert on investment fund research and due diligence on a variety of investment products.

Notes and Disclaimer

Commissions, trailing commissions, management fees and expenses all may be associated with fund investments. Please read the simplified prospectus before investing. Mutual funds are not guaranteed and are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Fund values change frequently, and past performance may not be repeated. No guarantee of performance is made or implied. This article is for information purposes only and is not intended as personalized investment advice. Dave Paterson is employed as an advising representative (portfolio manager) by Empire Life Investments Inc. (ELII), a subsidiary of Empire Life Insurance Company. ELII is the investment fund manager and portfolio manager of the Empire Life Mutual Funds and the portfolio manager of the Empire Life Segregated Funds (collectively, the Empire Funds). As such, his employment and his compensation may be connected to the success of ELII and the Empire Funds. From time to time, the Empire Funds may buy, sell, hold, or otherwise have an interest in securities that may be discussed in this report.