Fund managers need to plan recovery in three phases
Fund managers should be thinking about the market recovery in three phases: the virus phase, the recession phase and the recovery phase, according to Fidelity.
Speaking at the Fidelity Investment Forum, Fidelity global equities portfolio manager Amit Lodha, said the fund had tactically arranged their portfolio around those three phases.
“We spent a fair amount of time looking through portfolio stocks and have bucketed them into how they will perform in each phase of the cycle,” Lodha said.
Lodha said the recovery would be based on different winners and losers from those of part cycles, where new technology, climate change and environmental, social and governance (ESG) considerations would create new and different winners.
“If you look at the portfolio, based on the three phases, 14% is based on ‘virus stocks’: gaming companies, which do well during the stay at home phase, along with Spotify and Nintendo,” Lodha said.
“But 40% is focused on recession phase areas whose earnings are resilient, like grocers, food companies, utilities – all basic daily necessities.
“Then 46% of the fund is focused on companies which will be the winners in every sector as we come out of this period as economies recover.”
According to FE Analytics, the Fidelity global equities fund lost 0.6% from the start of the year to 30 June, 2020, compared to the global equities sector average within the Australian Core Strategies universe, which lost an average of 4.64%.
Performance of the Fidelity global equities fund compared to sector and benchmark from the start of the year to 30 June 2020
AUTHOR
Chris Dastoor
Recommended for you
As companies look to refine portfolios and adapt to regulatory changes, legal experts have flagged the financial services sector as one of the standout areas for M&A in the new year, particularly from overseas players.
Private debt has “plenty of room for growth”, according to global fund manager BlackRock, and will be helped by a number of tailwinds in the next five years.
The acquisition of Mason Stevens by private equity firm Adamantem Capital demonstrates the value of outsourced chief investment solutions to the financial planning arena.
The global investment manager has appointed a head of alternative credit to lead the expansion of its emerging market alternative credit platform.
