| Fund Company | Fidelity Investments Canada ULC |
| Fund Type | Canadian Focused Equity |
| Rating | C |
| Style | Blend |
| Risk Level | Medium High |
| Load Status | Optional |
| RRSP/RRIF Suitability | Fair |
| TFSA Suitability | Fair |
| Manager | Mark Schmehl since March 2011 |
| MER | 2.29% Series B, 2.51% Series A |
| Code | FID 235 – Front End Units FID 565 – DSC Units |
| Minimum Investment | $500 |
Analysis: Since taking over the reins of the fund in March 2011, Mark Schmehl has done a decent job in turning this fund around. For the three years ending January 31, the fund gained an annualized 11.4%, outpacing the S&P/TSX Composite which gained 7.5%. Much of this outperformance can be attributed to the significant U.S. based holdings, which currently sit at approximately 35% of the fund. Still, the fund managed to outperform a blended benchmark that includes U.S. stocks and finish in the top quartile, outpacing its peer group.
This Canadian focused equity fund invests in medium and large sized companies that the manager believes have a sustainable competitive advantage and a growth rate that is substantially higher than their competitors. To find these companies, a fundamentally driven, bottom up investment process that looks for well managed companies that have strong free cash flows, healthy balance sheets, and a clearly defined growth drive in place.
They are very active managing the fund with a portfolio turnover rate that is well above 200% in the past two years. This has added between 0.60% and 0.70% in additional costs to the fund, which makes it more difficult for the manager to outperform in slower markets.
It is a well diversified fund with more than 80 names. It can invest up to 49% outside of Canada and they are taking full advantage of that. As of January 31, the fund was invested 50% in Canadian equities and 49% abroad. It is very heavily weighted towards technology, which currently make up 22% of the fund. Financials and materials are also well represented.
Volatility is roughly in line with the broader market, but has increased slightly since the new manager took over. Despite this increase, we are not overly concerned, but will continue to monitor it.
Thus far, we like the direction that this fund is heading. It is not a bad choice for those looking for a more aggressive growth focused option within the Fidelity family. We still feel that more conservative, valued focused investors are better served through the Fidelity Canadian Large Cap Fund that with this offering.