HEAD-TO-HEAD: DWS versus Fidelity

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Investment approach

Bottom-up stock analysis is at the heart of the investment process for both funds, but a multi-factor model also plays an important role in idea generation for DWS Invest Top Dividend, according to Schumacher.

This multi-factor model ranks stocks on their dividend yield, pay-out ratio and dividend growth, and generates a list of ideas that are then researched fundamentally.

“Both funds aim to keep downside risks in check, and therefore look for robust and quality dividend paying companies, but there are some notable differences in portfolio positioning,” said Amsterdam-based Schumacher.

Fidelity Global Dividend currently has no exposure to energy stocks, while Total, Royal Dutch Shell and TC Energy are top-15 positions in the portfolio of DWS, resulting in a 10% exposure to the sector. Manager Thomas Schuessler also invests in mining companies, an industry that has been avoided by Fidelity’s Dan Roberts, according to Schumacher.

The funds invest less than their peers in banks and are overweight insurers, but Fidelity extends the exposure to the sector by investing in exchanges, such as Deutsche Boerse and Singapore Exhange. Consequently, it has 22.6% of its assets allocated to the sector, compared with 13.6% for DWS.

Both managers see opportunities within the semiconductor sector and invest around 8% of the portfolio there, but on top of that DWS invests in companies such as Microsoft, Accenture and TE Connectivity, lifting its technology exposure to 16.5% versus 9.3% for Fidelity.

“Finally, a distinguishing feature of DWS is the cash buffer, which typically makes up 5-10% of the portfolio and is used to dampen volatility of returns,” said Schumacher.

Fund characteristics

Sector allocation:

Source: Fund factsheets, 28 Feb 2021

Country allocation:

Source: Fund factsheets, 28 Feb 2021

Top 10 holdings:

Source: Fund factsheets, 28 Feb 2021

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