HEAD-TO-HEAD: Fidelity vs Loomis Sayles

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The performance of the Fidelity and Loomis Sayles funds vs their benchmark index (S&P 500). Tsymbaluk believes it is useful to compare US value equity funds with the Russell 1000 Value Index and US growth equity funds with the Russell 1000 Growth Index, both of which are included in the chart.

Performance

The Fidelity Fund has underperformed as value stocks have not performed well compared to growth stocks over the one-, three- and five-year periods, according to Tsymbaluk.

“It is hard for value managers to compete with the outperformance of growth,” she said.

However, there were years in which value stocks outperformed growth stocks, such as in 2012 and 2016.

Discreet annual calendar performance

Source: FE Analytics *to 31 August

Having said that, Tsymbaluk noted that the Fidelity fund still underperformed the Russell 1000 Value Index in 2016.

She explained that the value rally was led by commodities, which the Fidelity fund did not hold.

“The manager is value but not deep-value, so there are some value sectors in which he didn’t hold much, such as energy and telecommunications,” she said.

Turning to the Loomis Sayles Fund, Tsymbaluk said that the fund’s performance was driven by the rally in growth stocks, especially Amazon and Facebook, which are among the fund’s top holdings.

“Loomis Sayles should do well if quality growth does well. But the fund will suffer when value stocks do better.”

In terms of volatility, she believes that the Loomis Sayles fund is more volatile than the Fidelity fund due to its huge exposure to technology.

The two-year annualised volatility of the Fidelity fund is 11.80 and for the Loomis Sayles fund the figure is 12.73, according to data from FE.

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