Fidelity Funds - Global Demographics Fund, managed by experienced portfolio managers Hilary Natoff and Nicky Stafford, is an unconstrained portfolio of around 50-80 stocks which focuses on long-term trends such as population growth, the emergence of new middle classes and population ageing.
By investing in those companies where demographic factors are the single most important driver of growth over the next three to five years and beyond, the fund’s managers believe they can deliver superior returns over the long term, but with lower volatility than the broader market.
Hilary Natoff, Co-Manager of Fidelity Funds - Global Demographics Fund, comments: “The appeal of this fund is very straightforward. Demographics are, quite simply, the most powerful forces we will see in our investment lifetimes and we want to own the stocks which have the most to gain from this.”
Advantage across industry borders
With input from Fidelity’s global equity team and regional analysts, the fund managers will monitor an investment universe of around 1,000 companies where demographic trends are the dominant influence of the earnings power of a company. The universe is currently weighted towards healthcare and consumer stocks where many companies are set to benefit from an ageing population and the emergence of middle classes in emerging markets.
However, investment opportunities are not confined to these sectors, the fund managers have also identified ideas in other industries including: IT where some companies will benefit directly from increasingly wealthy and internet-savvy consumers willing and able to shop on-line, agriculture-related businesses that are expected to play a vital role in helping to supply food to a growing population and emerging markets banks which are seeing increased demand from a new and burgeoning generation of savers. All these companies share the common characteristic that demographic trends are the principal drivers of long-term, sustainable earnings growth.
The fund will invest in two types of company. The first are called the ‘winners of today’. These are primarily global leaders, dominant in their respective areas. They are companies that have already benefited from demographic trends to deliver a proven track record of earnings growth and high returns even in tough economic conditions. Usually these are larger companies listed in developed markets, although they will often have extensive global networks which allow them to harness the benefits of demographic changes in emerging markets. Examples in this area include Baxter International, SABMiller and Novo-Nordisk.
The second type of company is described as the ‘winners of tomorrow’. These are typically leaders in new growth markets, or innovators bringing new products to market which will play directly into demographic themes with the potential for strong future growth prospects. These companies are often more local in nature and have a mid to small cap bias. Winners of tomorrow offer higher return potential but are also more volatile stocks and therefore will tend to be smaller positions in the fund. One example is Endologix, which develops treatments for abdominal aortic aneurysms (generally associated with ageing).
It is the balance of these two types of company that give the fund its distinctive characteristics of low beta, lower volatility than the broader market and the potential to provide strong long-term growth.
Nicky Stafford, Co-Manager of Fidelity Funds - Global Demographics Fund, comments: “While we are looking to achieve superior returns, we are also keen to limit the downside risk. Demographic shifts have the advantage of being predictable and can tremendously enhance and sustain the long-term earnings power of those companies well positioned to benefit.”
The fund is launched on March 14 2012 and will be available in the Nordics through banks, insurance companies, fund platforms and independent advisers.
For more information on the fund or if you would like to talk to the fund managers – please contact Maria Zachrisson, Senior Marketing Manager, Fidelity Worldwide Investment.
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We recommend that you obtain detailed information before taking any investment decision. Investments should be made on the basis of the current prospectus, which is available along with the current annual and semi-annual reports free of charge from our distributors, from our European Service Centre in Luxembourg and from your financial advisor or from the branch of your bank. Past performance is not a reliable indicator of future results. The value of investments [and the income from them] can go down as well as up and investors may not get back the amount invested. For funds that invest in overseas markets, changes in currency exchange rates may affect the value of an investment. Foreign exchange transactions may be effected on an arms length basis by or through Fidelity companies from which a benefit may be derived by such companies. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only. Investors should also note that the views expressed may no longer be current and may have already been acted upon by Fidelity. The research and analysis used in this documentation is gathered by Fidelity for its use as an investment manager and may have already been acted upon for its own purposes.
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