HEAD-TO-HEAD: Fidelity versus Invesco

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Investment approach

The two funds share a similar objective to achieve long-term capital growth, and both are allowed considerable discretion in stock selection.

The Fidelity Asia Pacific Opportunities Fund’s manager is Anthony Srom, who has been with the firm for 13 years.

“He uses the breadth of resources within Fidelity to hone his best ideas, comparing what the market says about the share price versus his own interpretation of its valuation,” said McDermott.

The fund had 43 individual stock holdings at the end of March 2019, and the top 10 holdings made up around 52% of the total portfolio. These include outsized positions in commodity and mining companies (which MSCI place into its “basic materials” category), such as China Petroleum and Chemical, and Franco Nevada.

There is also a chunky 9.2% allocation to Kweichow Moutai, the leading manufacturer of the potent distilled Chinese liquor.

“Although he runs a concentrated portfolio, he makes sure the portfolio is diversified, while correlations of underlying stocks are monitored closely,” added McDermott.

Turning to the Invesco product, McDermott said co-manager William Lam “has a value-orientation and looks for companies where the market is underestimating earnings growth”.

Stocks are selected with a three-year investment horizon, “to give the share price time to appreciate to a level he believes to be fair value”.

In practice, the fund is heavily weighted to the telecom, media and technology sector (TMT), which comprises around 35% of the portfolio. The top three bets include Samsung Electronics, Tencent and Taiwan Semiconductor.

Lam and the other co-manager of Asian equity fund, Ian Hargreaves, “believe it is important to differentiate between good companies and good investments: the two are not always the same,” said McDermott.

“They have a very pragmatic approach and flexible strategy designed to separate these two elements.”

Source: FE Analytics; Morningstar. In US dollars.

*25 Apr 2016 – 25 Apr 2019

Market Exposure:

Sector Weightings (31 March 2019)

Source: FE Analytics

Top 5 holdings (31 March 2019)

Source: FE Analytics

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