Posted inHead To Head

HEAD-TO-HEAD: Fidelity versus Merian

FSA compares two global equity income products: the Fidelity Global Dividend Fund and the Merian Global Equity Income Fund.
by Rupert Walker

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Conclusion

The Fidelity fund has historically outperformed in flat or falling markets and underperformed in strong markets. It is the opposite for the Merian fund, which should do better when markets are strong, but may underperform during inflection points especially, according to McDermott.

“At this stage of the cycle I would opt for the Fidelity fund. We may see a late-stage surge in markets, but I think the downside risks are probably greater right now,” McDermott concluded.

In fact, the Fidelity fund’s portfolio beta has historically been below one, which means it does not have strong correlation with the market, according to Morningstar analysts.

This defensive quality has meant that “the fund has been particularly successful in preserving capital in down markets, with max drawdown, significantly less that the index”, said McDermott.

Nevertheless, “the Merian fund is definitely an option for higher octane investors or when markets look like they could have a sustained run,” he conceded.

Its diversified, quantitatively-based nature is designed to deliver consistent performance throughout the business cycle, irrespective of a favoured investment style at any one point in time.

“Arguably there is space for both funds in a larger portfolio,” said McDermott.

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