HEAD-TO-HEAD: Fidelity versus Ninety One

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Investment approach

The managers of the two strategies generate their investment ideas very differently, according to Parekh.

The Fidelity World Fund is a little more traditional with ideas coming from screens including Credit Suisse’s Holt platform and the Thomson Reuters StarMine monitor, as well as ideas directly from Fidelity’s large bank of analysts.

The strategy aims to achieve a gross return of 4% per year ahead of the MSCI World Index over a rolling three-year period. Ideas are generated primarily from the bottom-up.

Lead manager Jeremy Podger aims to identify companies that fall into at least one of the three categories which he defines as special situations: exceptional value, unique business, or corporate change.

He defines exceptional value as stocks that he believes have at least a 50% upside over the next three years. Unique businesses are those that dominate their industry and have a sustainable competitive advantage. Corporate change companies are those believed to have a likely catalyst over a 12- to 18-month horizon that can lead to a significant share price increase.

“Podger adheres to a sensible process when filtering investment ideas, and he makes good use of the resources available to him,” said Parekh.

The Ninety One GSF Global Strategic Equity fund makes use of the fund group’s “4Factor” proprietary model.

The 4Factor process ranks companies worldwide on: earnings, which considers momentum; value, including cash flow return on investment; strategy, identifying strong management teams that have a track record of creating value for shareholders; and technicals, highlighting a stock’s price trend and that trend’s durability.

From this output, the investment team perform fundamental analysis on the higher scoring stocks.

“The outcome of these differences has tended to be that the Ninety One fund exhibits a higher factor exposure to momentum but also quality,” said Parekh.

“In terms of positioning, each portfolio is well diversified with both typically holding between 70-90 stocks,” he said.

They both have holdings across various styles, sectors and the market cap spectrum, although they tend not go below the mid-cap range.

“The key difference is in their exposure to emerging markets: the Fidelity fund avoids the asset class entirely, whereas the Ninety One fund often has an overweight to it, including investment in China A-shares,” said Parekh.

Fund characteristics

Sector allocation:

Source: Fund factsheets, 31 May 2021

Country allocation:

Source: Fund factsheets, 31 May 2021

Top 10 holdings:

Source: Fund factsheets, 31 May 2021

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