- Daniel Roberts has one of the strongest stock-picking records in the global equity income sector
- We like the manager’s sensible, valuation-conscious approach which focuses on capital preservation
- The fund invests in high-quality businesses from around the globe offering sustainable dividends
- This fund features on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential
How it fits in a portfolio
This fund aims to deliver long-term income and growth, with a focus on sheltering capital in weaker markets. Daniel Roberts’ unconstrained approach allows him to invest anywhere in the world, but he tends to favour large companies from developed markets. He won’t compromise on quality and is mindful of valuation. Fidelity Global Dividend could provide international diversification to an income-focused portfolio and work well alongside ‘growth’ orientated funds.
Daniel Roberts is a seasoned investor with almost 20 years of experience under his belt. Prior to joining Fidelity in 2011, he worked at Gartmore and Aviva Investors running UK and European income portfolios. He has managed this fund since launch in January 2012, looking for the same type of companies as his previous funds but with a much richer hunting ground, the whole world.
He also manages the Fidelity Global Enhanced Income Fund, which is a near-identical portfolio that seeks to generate additional income using derivatives. Roberts has the flexibility to use derivatives in this fund too, which adds risk if used. Given the similar nature between the two, we are comfortable he has enough time to manage both effectively.
Roberts is the sole manager of this fund and carries out a lot of his own analysis, but he can make use of the large pool of Fidelity analysts available to him, totalling over 160 globally. He also benefits from the idea sharing and challenge provided by Fidelity’s Equity Income Team.
Roberts entered the investment industry around the time of the Dot-com crash, so he’s seen first-hand the risk of companies’ share prices rising too far without enough earnings growth support, making them ‘overvalued’. It means he pays close attention to valuations, and makes sure he doesn’t buy shares at a price above the company’s future growth potential.
Roberts’ approach focuses on individual company analysis, paying close attention to their financial accounts to ensure the company dividends are sustainable. He also assesses how a company has fared during different market conditions, looking to identify predictable revenue streams and resilience. The manager favours companies with simple business models, sensible management teams and healthy balance sheets whilst avoiding companies with too much debt.
The process whittles down a universe of 3,000 companies to a portfolio of between 40-60 holdings. There are currently 45 in the fund. These tend to be larger companies, at a size of $5bn and above. European companies make up around 40% of the fund, which includes exposure to areas like the UK, Switzerland and Germany. Just under a third is invested in the US, but this is much less than the benchmark. Roberts also invests in higher-risk smaller companies and emerging markets. There’s a broad range of themes in the fund with most of the fund invested in more defensive sectors like consumer staples and pharmaceuticals.
Roberts focuses on the long-term sustainability and growth of dividends, rather than high dividends now that may not grow further or be cut. This means there is no minimum yield requirement for any single investment and the manager invests in some companies with a yield lower than the market if there’s an expectation it will grow over time. The manager targets a yield at least 25% more than the benchmark’s yield.
The current market environment has provided opportunities to improve the quality of the fund. Recently Roberts added Finnish pulp and paper company UPM to the fund. He invested in the business at what he believes to be an attractive valuation. Legrand, a French electrical engineering firm has also been added. With a sensible balance sheet and strong management team in place, the business is attractively positioned. Several investments were sold over the past year including Swedish manufacturer Atlas Copco, beverage company Diageo and insurer RSA.
Please note charges can be taken from capital, which can increase the yield but reduces the potential for capital growth.
Fidelity was founded in 1969 and is a global investment manager. The company remains privately owned, meaning its managers can focus on the long-term interests of investors rather than short-term shareholder demands. That’s helped the firm develop an investment-focused culture, where investment ideas are openly discussed and debated, and information is shared amongst the firm’s various teams.
The company's scale means investment teams are well-resourced and fund managers are well-incentivised. We think it's positive that all Fidelity fund managers are incentivised based on the longer-term performance of their funds. We think this aligns their interests with those of investors.
Fidelity has worked hard to encourage its fund managers to integrate Environmental, Social and Governance (ESG) analysis into their investment processes in recent years. Managers have access to the firm’s proprietary ESG ratings tool and a bank of analysts with ESG expertise. That said, we think ESG integration is a work in progress at Fidelity and some managers don’t implement ESG as systematically as others. Roberts has always placed high emphasis on governance, but he began integrating environmental and social considerations more recently.
The fund is available for an annual ongoing charge of 0.93%. We think this is on the high side compared to the charges on other global income funds and sets a higher hurdle for the fund manager to generate positive returns. That said, we recognise the value that Roberts has added over and above these charges over the long term. The HL platform fee of up to 0.45% per year also applies.
Since the fund launched in 2012, it’s performed much better than the average fund, delivering returns of 180.8%* vs 128% for the IA Global Equity Income sector. Our analysis suggests this is down to Roberts’ stock picking ability and being exposed to the right regions. Remember past performance is not a guide to future returns.
Over the past 12 months the fund returned 9.7% vs 11.3% for the peer group average. Roberts’ conservative approach and focus on high quality companies means the fund performs quite differently to its peers at times. Historically, it’s performed well during falling markets, which was the case during market dips over the past year. In contrast, the fund tends to marginally lag peers in a rising market and not owning companies that are highly sensitive to economic conditions has hindered short-term performance. Over the longer term we believe this fund benefits from a well-resourced manager with the potential to deliver good returns for investors, but this isn’t guaranteed.
The fund’s best performer over the past year was semiconductor manufacturer TSMC, which benefitted from exposure to emerging trends such as AI and has a superior product to its competitors. Other notable performers included Samsung and energy technology company, Schneider Electric.
Whilst the fund wasn’t immune to dividend cuts or suspensions last year, these only accounted for less than 10% of the portfolio. Growth across the remaining holdings meant the fund increased its overall income for the year, with several companies seeing double digit dividend growth including some special (one-off) dividends paid by the likes of US Insurer Progressive. The fund currently yields 2.67%, although yields are variable and are not a reliable indicator of future income.
|Annual percentage growth|
| Feb 16 -
| Feb 17 -
| Feb 18 -
| Feb 19 -
| Feb 20 -
|Fidelity Global Dividend||23.3%||-0.3%||9.4%||9.5%||9.7%|
|IA Global Equity Income||28.3%||4.4%||2.1%||4.4%||11.3%|
Past performance is not a guide to the future. Source: *Lipper IM to 28/02/2021.