Portfolio Manager of the Fidelity Research Global Equities Fund, Matt Jones, explains how combining Fidelity’s global fundamental research platform with a systematic portfolio construction process can help investors build a more deliberate core equity allocation.
Our investment process is simple, transparent and eloquent. It starts with the human being, a fundamental analyst writing a research note. We take those best ideas from the research team along with other signals outside from the research team to help shrink down what is a universe of around 1,200 buy ideas to a portfolio of 60 to 80 ideas which sit in the Fund.
We aim to generate a portfolio that is broadly diversified, but not over diversified, and equally not too concentrated. Our aim is to focus on the stock picking capabilities of our research team i.e., the stock picking alpha that our research team has generated and is known to have generated for well over 50 years at Fidelity.
Our approach is very risk focussed. I think there's always two sides of the coin - the alpha side and then the risk side. We focus on risk at many levels, primarily at the stock level. The analysts covering the stock look at risk to thesis - the impact of what's going on in the world on that stock to help determine whether it's a buy rated name or a sell rated name. At a portfolio construction level, we deliberately aim to deliver the stock picking alpha from our research team.
It means we don't:
- take beta bets
- time the market
- take industry sector or country bets
We want to deliver a portfolio that's purely giving investors access to our stock picking capabilities at Fidelity.
The Fidelity Research Global Equities Fund is very different to a quant fund. At the starting and end point is a human being writing deep fundamental research. Even though we follow a very disciplined and risk aware approach, our process is extremely transparent. We can show you exactly how any idea gets in or out of the Fund or why we allocate capital or take capital away from a name, based on a stable, repeatable investment process.
It's essentially not a black box. The entry of a stock into the Fund to the exit from the Fund is very organic, driven by the analyst and their views on the stock, how those views change, how they're interpreting different information in the world, dependent and transparent on that analyst taking those views.
It's not a click button approach. It's something that we follow closely. It’s following the research analyst and how their views change on the stock.
