| Fund Company | Fidelity Investments Canada |
| Fund Type | Canadian Equity |
| Rating | C |
| Style | Growth at a Reasonable Price |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | Maxime Lemieux since November 2009 |
| MER | 2.28% |
| Code | FID 225 – Front End Units FID 525 – DSC Units |
| Minimum Investment | $500 |
Analysis: Using a “growth at a reasonable price” approach, manager Max Lemieux is not afraid to make “big sector bets” when he believes that the opportunities for outsized returns exist. When he sees such opportunities, he can invest up to 20% in any given sector. Currently, both financials and energy are near this limit.
He is also very comfortable avoiding sectors that he feels are particularly unattractive. Currently, he has minimal exposure to the materials sector. The rationale for this is he believes that the outlook for many commodities is muted at best, given the overall level of global economic growth. He also believes that the situation in China is much worse than we are led to believe, which will put further pressure on companies operating in the commodity focused sectors. Should this play out, it will likely result in an even more pronounced slowdown here at home. As a result, he is avoiding many consumer focused companies, and is instead looking at industrial focused exporters, which can benefit from the rebound in the U.S.
Like with other sectors, he can invest up to 20% in cash, and he is not afraid to do so. When he is unable to find attractive opportunities, cash will creep towards the limit. It is currently sitting around 10%.
While the portfolio may be concentrated on a sector basis, it is quite diversified, holding more than 80 names, with the top ten making up approximately 36% of the fund. Portfolio turnover has been modest, averaging 40% for the past five years.
Since 2009, when Mr. Lemieux took the reins of the fund, performance has been improving. For the three years ending April 30, the fund posted an average annual return of 4.7%, handily outpacing both the index and most of the peer group. Volatility has been in line with the index.
Despite the recent improvement, I would be reluctant to recommend this fund. It is a decent offering, but I believe that there are better options available. Within the Fidelity family, I would suggest the Fidelity Canadian Large Cap Fund, which I believe offers a more favourable risk reward profile.