| Fund Company | Fidelity Investments Canada |
| Fund Type | Global Small / Mid Cap Equity |
| Rating | D |
| Style | Mid Cap Value |
| Risk Level | Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Fair |
| TFSA Suitability | Fair |
| Manager | Joel Tillinghast since January 2012 Daniel Dupont since October 2011 |
| MER | 2.37%, Front End, 2.58% DSC |
| Code | FID 253 – Front End Units FID 553 – DSC Units |
| Minimum Investment | $500 |
Analysis: Despite two very strong, experienced and respected managers now at the helm, this “go anywhere” fund has largely been a disappointment for investors. Part of the reason for the underperformance may be the seemingly never ending revolving door on the manager’s office of the fund. Initially it was run by Alan Radlo. After he left, Cecilia Mo stepped into the chair before defecting to rival Dynamic in the fall of 2011. Since then, the team of Daniel Dupont and Joel Tillinghast has been managing the fund. But without consistency in the manager, it will be very difficult for the fund to gain any sort of sustainable momentum.
The team scours the globe looking for companies of any size, operating in any industry that is located anywhere in the world. Taking a medium to long term outlook, they are trying to find high quality, attractively valued stocks that offer what they consider to be an attractive risk reward profile. Historically the portfolio turnover in the fund has been very high, averaging above 100% per year, But with the new managers in place, we expect that we will see that decline over time.
As of December 31, the portfolio is very well diversified, holding more than 300 names across a number of different countries, sectors, and market capitalization. Approximately 36% is invested a large caps, with about half the fund is split equally between small and mid cap names. The fund also has a modest 15% exposure to micro cap companies. From a country standpoint, the US represents the largest exposure, making up about 32% fund, followed by Japan which makes up 20% of the fund.
Performance of the fund has struggled over the long term, however the past two years it appears to have improved. For the two years ended December 31, 2012, the fund posted an annualized loss of -0.9%, compared with the benchmark loss of -2.2% during the same period.
Despite the significant exposure to small and mid cap stocks, the managers have done a very good job in keeping volatility in check. It has exhibited a level of volatility that is in line with both the broader market, as well as the peer group.
While we have been encouraged by the improvement under the new management team, we would be reluctant to recommend this fund at this time. We believe that there are other global equity funds which offer a more compelling risk reward profile for investors.