Presenting the Fidelity Sustainable Global Equity Income Fund
FOR PROFESSIONAL INVESTORS ONLY
Portfolio manager Aditya Shivram introduces the fund from five angles and explains how it aims to deliver on its income and sustainability objectives.
IMPORTANT INFORMATION
The Fidelity Sustainable Global Equity Income Fund aims to deliver an attractive dividend-based return, with lower volatility than global equity market indices, through a concentrated portfolio of 40-50 quality companies with leading sustainability practices.
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Investing on a five-to-six year time horizon, Shivram says the fund can be considered a core long-term holding for investors, with the additional benefit of it engaging with companies to try and improve their direction of travel.
“When you see a market-stressed environment like we experienced in 2022 and during the pandemic, a combination of an attractive dividend-based return and lower drawdowns than the broader market leads to attractive risk-adjusted returns,” says Shivram.
In terms of current income prospects the fund’s largest overweight is in the Financials sector, where Shivram says he is hunting for companies with stable business models, good balance sheets and recurring revenue, but at attractive valuations.
For investors looking for a dividend-based total return
A focus on quality and sustainable dividend-payers
Targets lower volatility than global equity indices
In accordance with Fidelity’s sustainable family cross-asset fund range, a minimum of 70% of the fund’s net assets is invested in companies with a minimum ESG rating of BBB by MSCI. The fund also has a lower carbon footprint than the MSCI AC World Index.
Shivram says the fund’s investment process is broken up into three segments: idea generation, idea validation and portfolio construction.
Working closely with Fidelity’s global research team to uncover stocks with equally strong ESG and financial credentials, the end result is a portfolio with a 90% active share*.
“Our focus is on owning quality income businesses where the companies act like long-term owners of their business and act like good stewards,” he said. “Our job is to find those companies that integrate the fundamentals with sustainability in order to drive the long-term risk-adjusted returns and try to own them at a reasonable valuation.”
* Source: Fidelity International, as at Dec 2022
The portfolio typically has low turnover (historically around 20%), which reinforces its ability to engage meaningfully with companies on their sustainability credentials*.
The fund utilises Fidelity’s fundamental research and global research network to identify material ESG risks and opportunities at both individual company and sector levels. These teams comprise of over 120 equity research analysts* and over 20 ESG specialists*.
Shivram also has access to Fidelity’s proprietary ESG ratings, which pulls together different data for industries and companies to allow him to build his own unique view of a company’s ESG trajectory.
“When we look at sustainability we integrate the fundamental analysis with the sustainability characteristics to allow us to understand what is genuinely material for a company,” he says. “The fact that we do our own in-house analysis is very important and a key differentiator.”
In times of market stress, Shivram added that the fund has also delivered lower market drawdowns than its peers.
Source: Fidelity International, 31 Dec 2022. Fund information relates to the W Inc GBP share class. The ongoing charges figure is estimated and may vary from year to year. *Source: Fidelity International as at 30.09.22 **Source: Fidelity International as at January 2023.
Lead portfolio manager Aditya Shivram joined Fidelity as a private equity associate in 2003. In May 2011 he began managing Fidelity’s Global Equity Income strategy, and in October 2019 he took over the group’s Sustainable Global Equity Income strategy.
Shivram sits within Fidelity’s Global Equity Income team, which is made up of six members with an average experience of approximately 21 years.
“One of the big strengths of having a team like this is that we can bounce ideas off each other, whether they are new or existing ideas,” says Shivram. “This improves the analysis I bring to bear on the companies we own.”
Benefits from a team of six members with an average investment experience of approximately 21 years
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The Fidelity Sustainable Global Equity Income Fund was repurposed from the Fidelity Institutional Global Focus fund on 18 March 2022.
The fund shares the same portfolio as the Fidelity Funds (FF) Sustainable Global Equity Income Sicav, which Shivram has managed since October 2019.
Aditya’s longer term track record is represented by the FF Global Equity Income Fund which has delivered first quartile returns within its Global Equity Income peer group over a 5-year period.
Source: Fidelity International, Morningstar as at 31 December 2022. Performance shown for the SICAV since launch on 22.06.17 . Share class quoted: Y-ACC-USD. Performance is net of fees. Past performance is not a reliable indicator of future performance. The return of capital is not guaranteed.
Ranked 1st quartile over 3 and 5 years and since launch
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This information is for investment professionals only and should not be relied upon by private investors. The value of investments and the income from them can go down as well as up and you may not get back the amount invested. Past performance is not a reliable indicator of future returns. Changes in currency exchange rates may affect the value of an investment in overseas markets. Investments in emerging markets can be more volatile than other more developed markets. The Fidelity Sustainable Global Equity Income Fund can use financial derivative instruments for investment purposes, which may expose it to a higher degree of risk and can cause investments to experience larger than average price fluctuations. A focus on securities of companies which maintain strong environmental, social and governance (“ESG”) credentials may result in a return that at times compares unfavourably to similar products without such focus. No representation nor warranty is made with respect to the fairness, accuracy or completeness of such credentials. The status of a security’s ESG credentials can change over time. Investors should note that the views expressed may no longer be current and may have already been acted upon. Reference to specific securities should not be interpreted as a recommendation to buy or sell these securities but is included for the purposes of illustration only. Investments should be made on the basis of the current prospectus, which is available along with the Key Investor Information Document (Key Information Document for Investment Trusts), current annual and semi-annual reports free of charge on request by calling 0800 368 1732. Fidelity only gives information on products and services and does not give investment advice to retail clients based on individual circumstances. Issued by FIL Pensions Management, authorised and regulated by the Financial Conduct Authority and Financial Administration Services Limited, authorised and regulated by the Financial Conduct Authority. Fidelity International, the Fidelity International logo and F symbol are trademarks of FIL Limited. UKM0123/371872/SSO/NA