• New fund launches on 30 January
• Provides investors with a gross yield around 25% above the yield of the MSCI All Countries World Index
Fidelity Worldwide Investment is set to expand its equity income offering with the launch of the Fidelity Global Dividend Fund managed by experienced investor Daniel Roberts.
With an unconstrained portfolio of around 50 best ideas from around the world, the fund seeks to invest in companies which provide a combination of capital growth and income growth. This will provide investors with a gross yield around 25% above the yield of the MSCI All Countries World Index which is expected to equate to an estimated fund yield at launch of 4%*.
By managing the yield at a portfolio level, Roberts aims to strike a balance between stocks with a high yield today and those which have a lower yield now, but the potential for substantial future dividend growth.
He will look for companies which offer sustainable dividend growth coupled to a good downside protection which should be afforded by a healthy balance sheet, valuation support, the fundamental strength of the business or ideally a combination of all these.
He will apply the same investment approach he has followed throughout his career, making use of Fidelity’s global research team to explore the global universe.
Why global equity income?
While there are 460 companies in the FTSE All Share (ex Investment Trusts), there are around 2,500 in the MSCI All Countries World Index**. This broader universe affords greater opportunity for both stock selection and diversification.
For example, an investor restricted to the UK has only a handful of stocks to choose from in some important income sectors such as pharmaceuticals, telecoms and oil. By casting the net wider, it is possible to add value by investing in the best sector opportunities wherever the underlying stock happens to be listed.
In addition, by investing globally, it is also possible to access sectors that are under-represented in the UK, such as IT. Likewise, sectors which are represented but offer little prospect of income become viable options, such as banking stocks, where UK listed companies have little or no yield when compared to their Australian counterparts.
Dan Roberts, portfolio manager, Fidelity Global Dividend Fund, comments: “As I have done throughout my career, I invest in stocks where there is a good margin of safety, providing a degree of capital protection in volatile markets, and where progressive distribution policies give the potential for sustainable dividend growth. I aim to deliver a combination of strong long-term returns with lower volatility than the broader market and income growth ahead of inflation.”
Dominic Rossi, Global Chief Investment Officer, Equities, Fidelity Worldwide Investment, comments: “Investors need to rethink if they want to generate strong long-term returns ahead of inflation in 2012 and beyond. There will be no quick fixes to the government debt crisis in developed markets. Returns on cash are so low that they generally lose money after taking inflation into account. All this means that the options available to investors seeking income are currently restricted. In this market environment, equities paying out robust dividends offer the best of both worlds: regular income and, if individual stocks are carefully selected, the prospect of returns on capital as equity prices rise.”
About the manager
Daniel Roberts has more than ten years of investment experience and joined Fidelity in November 2011. Prior to joining Fidelity, he was a portfolio manager at Gartmore, where he managed their UK Equity Income Fund until the company was acquired and restructured by Henderson.
Before that, he spent six years managing UK equity income portfolios at Aviva Investors, including the Aviva Investors UK Equity Income Fund.
Fidelity Global Dividend launches on 30 January. Its comparative index will be the MSCI All Countries World Index and it will sit in the IMA Global Equity Income sector***. The fund will have both distribution and accumulation shares. Distributions will be quarterly.
* The estimated yield is based on an indicative fund portfolio. The actual portfolio at launch may be different, reflecting market movements. The estimated yield reflects an independent assessment of the dividends due to the indicative portfolio over the next 12 months, net of withholding tax and charges taken from income. As a result of the annual management charge being taken from capital, the distributable income may be higher but the fund’s capital value may be eroded, which will affect future performance. The yield is not guaranteed and will fluctuate in line with the yield available from the market. The fund should only be considered as a long term investment.
** As at 31 December 2011
*** Holdings can vary from those in the index quoted. For this reason the comparison index is used for reference only.