Some things change: some stay the same

In the twenty years since its inception, the Fidelity Global Equities Fund has exceeded the benchmark over all time periods1. We speak to Amit Lodha about his success as a portfolio manager, the Fund’s evolution and what’s changed for him over the last decade.

1. If we think back over the last twenty years so much has happened. Where were you twenty years ago?
In 1998, I was an accountant with KPMG with an interest in markets but was really concentrating on developing my skills to understand the internal workings and accounting functions of various banks and financial institutions. Knowing little at that time, this was an essential period for laying the foundations for my future career in financial markets.   It was just after the Asian financial crisis and my time was spent on a number of interesting projects including working on the liquidation of Barings and Peregrine Financial which gave me a ringside view of poor corporate incentives and behaviour.   

2. What’s been the biggest change?
The 2000 and 2008 bear markets were tough for active management. The importance of technology has increased massively across sectors - companies have had to adapt. Even in asset management, we have been affected as high-frequency trading can react to quarterly earnings releases much faster than we can.

As fundamental bottom-up investors in the age of quant and machine learning, now more than ever it’s important to look at the impact of qualitative factors that really drive the trajectory of the cash flows which determine the value of a business.

3. We’ve talked about change, what’s stayed the same?
Paying attention to valuations - the in-price when you make an investment, analysing cash flows and the duration of a business to assess long term sustainability have remained as important as ever.

4. Why should investors invest in the Fidelity Global Equities Fund? What differentiates it from others? 
The strength of Fidelity’s research capability is a big differentiator. That and a consistent process focused on stock selection has enabled me to generate strong risk adjusted performance for investors.

5. Since inception the Fund has outperformed the benchmark over all time periods1.  What do you attribute your success to?  
Good stock picking! I haven’t taken big country or sector bets but have instead focused on finding stocks with good management teams who are incentivised in favour of investors and maintain good corporate governance.

6. Over your tenure, what have been your biggest learnings as a portfolio manager and how has it made you a better investor today? 
I’ve learnt that it’s important to really get to know management teams and to understand how they are being incentivised to run the companies they manage. Our analysts have an investment thesis and I can make an investment decision based on that thesis, but it is only going to be a good investment if management are properly incentivised to make capital allocation decisions in line with our expectations.

7. If you were to give one piece of advice to investors, what would it be? 
The intrinsic value of a business does not change as fast as the valuations attributed to a business by the stock market. There will always be opportunities that arise for fundamental bottom-up stock pickers to exploit these anomalies.

Quarterly update

Amit Lodha provides an update of the Fund’s performance and current positioning and outlines how he’s managed to stay ahead of the game and deliver such consistent returns. 

Amit also provides a market update and outlines where he’s currently seeing opportunities by providing some specific examples from the portfolio. 

You can access Amit’s quarterly update via the button below. 

Watch quarterly update

1 As at 31 March 2018. Benchmark is MSCI All Country World Index NR. Inception date: 15 April 1998.