Key takeaways
- The portfolio managers for the Fidelity Global Future Leaders Fund actively blend quality, value, transition, and momentum stocks with the aim of delivering smooth returns and enhancing portfolio resilience.
- Deep, ongoing company analysis focused on company characteristics rather than sector labels supports conviction through market noise, particularly when holdings face scrutiny or volatility.
- Our case studies highlight the funds unique investment process and how the manager’s disciplined approach has contributed to the Fund’s strong track record.
In today’s uncertain macroeconomic environment, investors are increasingly looking for strategies that provide both resilience and growth potential. One powerful way to achieve this is by investing in a diversified mix of companies across a range of sectors, particularly within the global mid-cap space. These companies often represent the “sweet spot” of innovation, scalability, and operational maturity —positioned to benefit from structural shifts across industries without the vulnerabilities of early-stage risks or large-cap complacency.
By spreading investments across sectors, from technology and healthcare to energy and consumer goods, investors gain exposure to multiple growth drivers with less reliance on any single economic trend. More importantly, this approach allows for the discovery of underappreciated transition stories, high-quality compounders, and momentum plays that might otherwise be overlooked.
Using case studies from the Fidelity Global Future Leaders Fund (also available as an active ETF ASX:FCAP) the investment team share how their unique investment process helps to navigate market cycles, capitalise on evolving business models, with the aim to deliver smoother returns to investors through different market cycles.
The power of a structured yet adaptive process
At the heart of our investment process lies the QVTM framework which allocates capital across four investment styles: Quality, Value, Transition, and Momentum.
Grounded in fundamental stock selection, we use this framework to meet changing market conditions by reallocating weights in the Fund between these four “segments.” This helps the Fund avoid style concentration risk and capitalise on a wider opportunity set.
The targeted segment mix is:
| Characteristics of companies | Companies considered for the portfolio | Portfolio segment mix* | |
|---|---|---|---|
| Quality | Companies possessing a strong franchise with compounding earnings growth and high return on equity | Quality companies | 40% of portfolio (± 10%) |
| Value | Out-of-favour companies that are attractively priced | Companies that will return to favour | 30% of portfolio (± 10%) |
| Transition | Companies facing fundamental changes that could be an opportunity or a threat, making their return on capital uncertain | Companies facing promising changes | 20% of portfolio (± 10%) |
| Momentum | Companies in a cyclical upswing with rising return on equity, near term strength and scarce attributes | Companies with upward momentum | 10% of portfolio (± 10%) |
A proven process delivering more consistent returns
Over the past 5 years (2020-2025), investors have faced a rollercoaster of market-moving events—from the COVID-19 crash and recovery to soaring inflation, rapid interest rate hikes, and geopolitical shocks like the war in Ukraine. A powerful AI and tech boom sent mega-cap stocks surging, even as bouts of volatility from banking troubles, policy shifts, and slowing growth in China tested nerves.
Along the way, the portfolio steered through volatile markets to outperform its benchmark across the 1-, 3- year and since inception (September 2020) time periods with a strong risk-return profile as compared to its Morningstar peer group.
Net returns as at 31 July 2025
| Timeframe | 1-Year % |
3-Year % |
Since inception (28/09/20) |
|---|---|---|---|
| Fund | 17.59 | 14.45 | 13.27 |
| Benchmark | 15.49 | 14.22 | 12.38 |
| Active return | 2.10 | 0.23 | 0.89 |
Total net returns represent past performance only. Past performance is not a reliable indicator of future performance. Total returns (net) have been calculated using exit prices and take into account the applicable buy/sell spread and are net of Fidelity’s management costs, transactional and operational costs and assumes reinvestment of distributions. No allowance has been made for taxation or for any fees charged by operators of master trusts or wrap accounts through which the products are offered. Returns of more than one year are annualised. Returns of the Fund can be volatile and, in some periods, may be negative. The return of capital is not guaranteed. Benchmark: MSCI World Mid Cap Index NR: NR at the end of the benchmark name indicates the return is calculated including reinvesting net dividends. The dividend is reinvested after deduction of withholding tax, applying the withholding tax rate to non-resident individuals who do not benefit from double taxation treaties.
The process in action
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Technology AppLovin, a mobile advertising technology company leveraging artificial intelligence (AI)-powered ad placement, showcases the Fund’s process in action. It places advertisements real time in mobile games and other applications using its proprietary “AXON Engine”, an AI-based tool that matches ads to users. The company benefits from two sources of revenue - advertisers who pay for the ads viewed and the revenue from in-app purchases, i.e. consumer spending through the applications they are using. The company listed at the NASDAQ in April 2021. We invested in the company in April 2024, assessing it was a ‘quality’ holding. We were enthused by the success of AXON 2.0, on its way to becoming the industry-leading ad-matching software with its rapid rollout and adoption. The founder-led CEO continued to drive a growth strategy and through the AXON 2.0 app, the company expanded beyond gaming advertisements to e-commerce and other non-gaming verticals. The company saw significant growth in software revenue, boosting profit margins which led to multiple broker upgrades. The valuation boost shifted the stock into the “momentum” category as its success attracted attention in the investor community. Before long however, the company faced scrutiny, and its stock fell following multiple short reports questioning the credibility of its digital advertising revenue. Our team relied on fundamental research and retained conviction, ultimately benefiting from the subsequent valuation recovery. We first traded AppLovin at US$68.34 in April 2024, and the stock has now increased over sixfold since then. |
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Energy The Fund’s disciplined sector approach is also evident in its energy holdings, traditionally associated with large-cap businesses. Cheniere Energy and Devon Energy positions have been leading contributors over the Fund’s tenure, both contributing as “value” and “transition” plays over their holding periods in the strategy. In late 2020, a position was initiated in Cheniere Energy, the largest liquefied natural gas (LNG) exporter in the US. Given the cleaner alternative offered by LNG vs coal, the business offered strong structural demand growth prospects and healthy cash flow yield prospects, which were not reflected in the share price at the time. Devon Energy was added to the portfolio in early 2021, as a transition-driven restructuring led exploration and production opportunity. We saw its merger with WPX Energy as an opportunity for the business to sharpen its focus on four specific basins. Early on in our holding periods, these stocks benefitted from an uptrend in energy prices and revival of economic activity. Devon Energy delivered strong growth in its production volumes. The company announced a share buyback programme for 2022 and strong growth in its dividend pay-out, which was well received by investors. Furthermore, geo-political instability and the terrible war in Ukraine drove energy prices higher. European consumers shifted to US LNG supply to reduce their reliance on Russian oil & gas, which supported Cheniere’s prospects. Our valuation discipline led to profit taking and we eventually exited both stocks from the portfolio. |
As investors in an environment of constant flux, we believe our ability to identify and capitalise on opportunities across multiple sectors gives the Fund a powerful edge.
The Fidelity Global Future Leaders Fund’s proven framework shows that blending quality, value, transition, and momentum—while staying adaptable—can help deliver smoother returns and stronger resilience through uncertainty. Embracing a disciplined, cross-sector investment approach isn’t just prudent, it’s essential for success in the global mid-cap arena.
