- Dan Roberts has one of the strongest stock-picking records in the global equity income sector
- We like his sensible investment approach and that he doesn’t overlook unfashionable areas
- It’s one of the only funds to have beaten the broader global stock market over the long term
- We have added this fund to our Wealth Shortlist of funds chosen by our analysts for their long-term potential
How it fits in a portfolio
This fund searches for sustainable sources of income from companies around the world. Its goal is to provide a moderate but growing income, rather than a higher but potentially unreliable one. It also aims to provide long-term capital growth while staying focused on sheltering investors’ capital. The fund could provide international diversification to a UK-focused income portfolio, or add some steadier long-term growth potential to a more adventurous portfolio.
Dan Roberts has been managing funds since 2005. He started out running UK equity income portfolios and then took on this global income fund in January 2012, after joining Fidelity the year before.
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. We think running just two very similar portfolios enables Roberts to remain focused.
There are no co-managers on this fund but Roberts has the support of a wide range of resources at Fidelity. This includes a huge pool of analysts, whose research and insights he can freely draw on, although he still does a lot of analysis himself. He also benefits from idea sharing and challenge as part of Fidelity’s Equity Income Team.
Roberts seeks to find 45-55 companies he thinks are easy to understand, have high-quality business models, and are financially robust. They must also be attractively priced, as he thinks valuations have the biggest impact on whether a stock will be a future winner or not.
Given the fund aims to deliver a healthy and rising income, Roberts looks for companies that can sustainably grow their dividends over many years. That’s more important to him than what a company’s yield is. Although he doesn’t set a minimum yield target for any single investment, he makes sure the portfolio as a whole yields at least 25% more than the broader global stock market.
Roberts places more importance on sheltering investor’s capital than growing it, so he always considers what could potentially go wrong at businesses. He also rarely invests more than 4% of the portfolio in any one stock, to reduce the risk of a poor performer having too much of an impact.
The portfolio is composed of mainly large companies from developed countries, but Roberts can also invest in higher-risk smaller companies and emerging markets. Approximately a third of the portfolio is invested in companies from the US, but this is only around half as much as the global stock market average. He’s currently finding lots of opportunities in healthcare and technology, but also isn’t afraid to invest in unloved sectors such as financial services and telecoms.
Please note charges can be taken from capital, which can increase the yield but reduces the potential for capital growth.
Fidelity International began life in 1969 as part of US-based Fidelity Investments, one of the largest asset managers in the world. It was spun off in 1980 and remains a separate, private business owned by its employees. We think that’s a good thing as it means the company can focus on the long-term and encourages employees to commit to the business.
Fidelity International is a large firm in its own right and one of the best resourced asset managers around. It has a bank of several hundred research analysts, which are used as a central resource by fund managers from across the business. Managers don’t have to agree with or even use the analysts’ research, but it is undoubtedly a valuable resource available to them.
The fund is available for an annual ongoing charge of 0.92%. 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.
While the fund has fallen slightly since the beginning of the year amid recent market volatility, it’s done better than the global stock market and significantly better than the IA Global Equity Income sector. Not investing in some of the areas worst affected by the coronavirus pandemic, such as European banks, energy, aerospace, travel & leisure and property, has been a big help.
Roberts thinks some dividend cuts will be inevitable and there is still uncertainty given the current market backdrop, but he’s reassured by the financial strength of the companies in the portfolio. The fund currently yields 2.84% although remember yields are variable and income isn’t guaranteed.
Over the long term Roberts has delivered strong results. Since he took over the fund in January 2012 he’s delivered a gain of 170.5% versus the FTSE All World’s 155.3%* rise. This is impressive given how difficult it’s been for global income managers to beat the broader global stock market in recent years. Much of the market gains have been driven by low-to-no-dividend-paying companies, which global income managers usually can’t invest in. In fact, the fund is one of the only IA Global Equity Income sector funds to have beaten the global stock market over the long term. Remember past performance isn’t a guide to the future.
Roberts has achieved this through one of the best stock-picking records in the sector according to our analysis, and by investing fairly conservatively. So while he’s usually not quite kept up when markets have risen, he’s held up much better when they’ve fallen. We’d expect Roberts’ approach to keep delivering good long-term results, although there are no guarantees.
Fidelity Global Dividend performance under Dan Roberts
Past performance is not a guide to the future. Source: *Lipper IM to 31/05/2020
|Annual percentage growth|
| May 15 -
| May 16 -
| May 17 -
| May 18 -
| May 19 -
|Fidelity Global Dividend||7.1%||26.3%||-0.6%||13.2%||7.7%|
|FTSE All World||-0.2%||33.3%||9.0%||4.6%||8.0%|
Past performance is not a guide to the future. Source: Lipper IM to 31/05/2020