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Fidelity Global Equities Fund commentary
April 2012
Global stocks fell in April as US economic data disappointed and the eurozone crisis threatened to veer out of control gain. An increase in the Australian dollar widened the loss for unhedged investors. The MSCI All Countries World Index (unhedged) fell 1.6% over the month, while the MSCI ACWI hedged in Australian dollars lost 1.1%.
US stocks dipped over April as concerns about the economy overshadowed better-than-expected first-quarter earnings – JPMorgan says that 73% of companies to report in April beat estimates. During the month, the Federal Reserve lowered its outlook for 2013-14 while an economic report showed US economic growth slowed to an annualised 2.2% in the first quarter, from a comparable rate of 3% in the fourth quarter. Of concern to investors, non-farm payrolls growth slowed as only 120,000 jobs were added in March, the first time since November that fewer than 200,000 jobs were added in a month. The S&P 500 Index shed 0.7%.
European stocks slumped as a surge in Spanish yields pushed the country closer to a bailout, François Hollande, who vows to renegotiate Europe’s new tough fiscal compact, won the first-round elections for the French presidency and the Dutch minority government collapsed due to opposition to its austerity drive. The Euro STOXX 50 Index shed 6.9%.
Japanese and emerging-market stocks fell on the glum global news. The Nikkei 225 lost 5.6% while the MSCI Emerging Markets Index lost 1.2% in US dollars.
The portfolio
The Fidelity Global Equities Fund outperformed by 0.61% over the month.* The biggest contributors included overweights in eBay, Citrix Systems and Amazon.com.
EBay gained 11% after first-quarter sales rose 29% as the internet-auction site earned a higher-than-expected US$570 million for the period. Citrix jumped 8.5% after the technology-solutions company boosted revenue and earnings-per-share forecasts when announcing a higher-than-expected first-quarter result. Amazon.com surged 15% after the world’s biggest internet retailer’s first-quarter result outdid forecasts, helped by strong Kindle sales.
The biggest detractors included overweights in Citigroup, Goldcorp and UBS. Citigroup slid 9.6% after its first-quarter profit came in about 7% below estimates. Goldcorp lost 15% after delivering a lower-than-expected first-quarter result and Chile’s Supreme Court suspended approval of the El Morro copper and gold project environment permit, citing “deficiencies”. UBS shed 10% after its first-quarter earnings tumbled 54% as its investment bank turned out a loss and the bank suffered an accounting charge on its debt.
Sources: Royal Bank of Scotland, JPMorgan, Macquarie Equities Research, UBS Investment Research and Bloomberg. Reference to companies is for illustration purposes only and does not constitute a recommendation.
* Net returns have been calculated using mid-prices and are net of Fidelity’s management costs, transactional and operational costs. The calculation assumes reinvestment of distributions. No allowance has been made for tax. The return of capital is not guaranteed. Past performance is not a reliable indicator of future performance.
This document is issued by FIL Responsible Entity (Australia) Limited ABN 33 148 059 009, AFSL No. 409340 ("Fidelity Australia"). Fidelity Australia is a member of the FIL Limited group of companies commonly known as Fidelity Worldwide Investment. Prior to making an investment decision retail investors should seek advice from their financial adviser. Please remember past performance is not a guide to the future. Investors should also obtain and consider the Product Disclosure Statements ("PDS") for the fund mentioned in this document. The PDS is available on www.fidelity.com.au or can be obtained by contacting Fidelity Australia on 1800 119 270. This document has been prepared without taking into account your objectives, financial situation or needs. You should consider such matters before acting on the information contained in this document. This document may include general commentary on market activity, industry or sector trends or other broad based economic or political conditions which should not be construed as investment advice. Information stated herein about specific securities is subject to change. Any reference to specific securities should not be construed as a recommendation to buy, sell or hold these securities. While the information contained in this document has been prepared with reasonable care no responsibility or liability is accepted for any errors or omissions or misstatements however caused. The document may not be reproduced or transmitted without prior written permission of Fidelity Australia. The issuer of Fidelity funds is FIL Responsible Entity (Australia) Limited ABN 33 148 059 009. References to ($) are in Australian dollars unless stated otherwise. © 2012 FIL Responsible Entity (Australia) Limited. Fidelity, Fidelity Worldwide Investment, and the Fidelity Worldwide Investment logo and F symbol are trademarks of FIL Limited.