HEAD-TO-HEAD: Fidelity versus Merian

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Source: FE Analytics. Three-year cumulative performance in US dollars of the two funds versus the sector and benchmark. 

Performance

“The Fidelity fund has a longer track record and has consistently beaten or not been far-off the peer group average every calendar year since launch,” said McDermott.

“Its worst [relative] year was in 2017 when it returned 16.24% compared with 22.20% in US dollar terms (according to FE Analytics) in a strong market,” he said.

However, “importantly, it holds up well in falling markets – recording a positive return of 1.58% in 2015, when the peer group fell 2.73%, and only losing 4.81% last year, when the average fund was down 11.83%,” he added.

“Cumulatively, this means the fund has been strong over five years, returning eight percentage points more than its sector average [although underperforming over three years].”

Morningstar agrees that the Fidelity fund has been a solid performer since inception, noting that its track record has been built on generating outperformance in more difficult markets, while just about keeping up in strongly rising markets.

In contrast, “during its four-year history, the Merian fund has so far outperformed strongly in rising markets but fallen more in downturns,” according to McDermott.

It declined 14.26% in 2018, but “while it has been more volatile (12.16% compared with Fidelity’s 10.18%), it has outperformed the Fidelity fund over three years and since its launch in 2015,” he added.

Finally, McDermott pointed out that the Merian fund has a higher yield (3.1%) than the Fidelity fund (2.5%) – and of course, receiving income is the reason why investors buy these two funds.

Discrete annual performance

 Source: FE Analytics. Annual returns in US dollars.

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