Aditya Khowala will take over from Peter Kaye as manager of the Fidelity American Fund on 1 September 2015. Between now and then the managers will work together to ensure a smooth transition.
Aditya Khowala joined Fidelity in 2006 as an analyst, before becoming manager of the Fidelity Funds American Growth Fund in December 2012. In managing this fund he looks for companies capable of benefiting from long-term trends to deliver above average growth. In particular he aims to identify companies with pricing power - the ability to raise prices without seeing a drop in demand for their products and services. He believes this helps grow cash flow over the long term. He also tends to find the best opportunities among medium-sized and higher-risk smaller companies, so the fund has a bias to this area. He will use this approach when he takes over the Fidelity American Fund.
This approach differs from that used by Peter Kaye, who tended to look for companies which have been through a tough period, but where he identified signs of a turnaround, such as rising earnings or improved profitability, which could lead to strong growth. He aimed to invest while most investors still held a negative view and did not appreciate the company’s prospects. Like Aditya Khowala though he did tend to have a bias towards medium-sized and smaller companies. He also has the flexibility to use derivatives, which also add risk, and Aditya Khowala will retain this flexibility when he takes over.
Our view on this fund
Peter Kaye managed the Fidelity American Fund from 1 February 2013 during which time it delivered a return of 42.1%, underperforming the S&P 500 Index which grew by 47.2%*. Although this is a relatively short period over which to measure performance the result is disappointing nonetheless.
Since assuming responsibility for the Fidelity Funds American Growth Fund on 21 December 2012, Aditya Khowala has outperformed the index, growing the fund by 68.3%* compared with 60.4% for the S&P 500. Again, this is a short period over which to judge a fund manager, but it is an encouraging start. Remember though, past performance is not a guide to future returns.
|Annual percentage growth|
| Aug 10 -
| Aug 11 -
| Aug 12 -
| Aug 13 -
| Aug 14 -
|Fidelity Funds - American Growth||11.77%||5.88%||30.59%||5.11%||21.95%|
|S&P 500 TR||13.98%||13.97%||30.53%||3.67%||19.93%|
Past performance is not a guide to future returns.
Source: Lipper IM *to 03/08/2015
When seeking funds for the Wealth 150 we prefer fund managers with longer track records of consistent outperformance and this fund is therefore not under consideration at the current time. However, providing the objectives of a portfolio continue to be met through the inclusion of this fund we don’t see any need for undue concern.