In a market often dominated by a single theme or investment style, Fidelity’s Global Special Situations strategy takes a deliberately balanced approach.
Portfolio managers Christine Baalham and Tom Record believe attractive opportunities can be found across value, quality and growth investing. Rather than trying to predict which style will outperform next, they focus on building a portfolio that can perform across a range of market environments.
At the heart of their approach is the belief that markets are most inefficient during periods of change, and Fidelity’s greatest investment edge comes from its global research platform.
Why Fidelity?
With more than 140 analysts globally, around 95% of the benchmark assigned to analyst coverage and over 85% actively rated, Fidelity’s research platform provides a vast pool of investment insights.
Rather than starting with top-down market views, Baalham and Record see their role as identifying and combining the best ideas emerging from this network, with the view that the portfolio should reflect the strength of Fidelity's research platform, not the views of any one individual.
The result is a strategy where active risk is driven primarily by stock selection rather than style, sector or macroeconomic bets.
An ecosystem for success
Source: Fidelity International. As at 31 March 2026. Number of Investment Professionals updated quarterly. Latest quarterly data provided.
How do they think about investing?
The portfolio managers’ starting point is that attractive opportunities exist across all investment styles. The challenge is that value, quality and growth can each go through extended periods of outperformance and underperformance.
Rather than trying to predict those cycles, the team seeks diversification across three distinct sources of alpha, referred to as the “Three Pillars”.
Source: Fidelity International as at 31 May 2026.
Value focuses on companies trading below intrinsic value where a catalyst exists for improvement, such as a restructuring, recovery or operational turnaround.
Quality targets businesses where the market underestimates the durability of competitive advantages and long-term earnings power.
Growth looks for companies benefiting from structural trends, technological change or industry disruption, where future growth potential remains underappreciated.
While each pillar has a different risk profile and time horizon, all investments are held to the same standard: the potential to generate attractive long-term shareholder returns.
What types of opportunities are most interesting today?
A common thread running through the portfolio is change. The managers believe markets are often slow to recognise how businesses evolve. Whether it is a new management team, a spin-off, an improving industry structure or an emerging growth opportunity, these periods of transition can create attractive mispricing opportunities. More broadly, they are constantly searching for situations where positive change is underway but not yet reflected in market expectations.
How does an idea make it into the portfolio?
The investment process is deliberately collaborative. Every holding is jointly owned, and no stock enters the portfolio unless both managers have conviction.
Exposure is maintained across all three pillars, but allocations are not fixed. Instead, capital is directed towards the areas where the team sees the most compelling opportunities.
The managers also spend significant time thinking about how a new position fits alongside existing holdings. Finding a good stock is only part of the challenge; understanding what it does to the overall portfolio is equally important.
Source: Fidelity International, MSCI Barra, 31 May 2026. Indicative Range and Data for FIF Global Special Situations Fund. Comparative index is MSCI AC World Index.
When do they sell?
Selling is often more difficult than buying, but the managers keep the process relatively simple.
Every stock review begins with two questions:
• Has the investment thesis broken?
• Is there still sufficient upside?
Analyst downgrades naturally trigger discussion, but they do not automatically lead to a sale. Fidelity's analysts bring deep expertise on individual companies, while portfolio managers must also consider portfolio construction and relative opportunities.
That tension creates valuable debate and helps avoid mechanical decision-making. The emphasis remains on independent thinking rather than blindly following ratings changes.
How are they thinking about risk today?
Baalham and Record are pragmatic. They believe you must invest in the market reality, not the academic view of what you think the market should do. Their goal is not to defend every position at all costs, but to ensure the portfolio remains balanced as market dynamics evolve.
The recent AI-driven rally serves as an example. While they remained positive on many individual holdings, they recognised that market narratives were causing seemingly unrelated stocks to become increasingly correlated. Rather than doubling down, they selectively reduced exposure and rebalanced risk where necessary.
A portfolio built for different outcomes
Looking ahead, the managers acknowledge that the range of possible market outcomes feels unusually wide. Artificial intelligence continues to drive earnings growth and market leadership, but concerns around inflation, fiscal deficits and bond yields remain firmly in the background.
Instead of making concentrated macro calls, the team focuses on maintaining exposure to multiple sources of return while ensuring stock selection remains the primary driver of performance. Ultimately, their philosophy is straightforward: use Fidelity's research platform to identify the best opportunities across value, quality and growth, stay disciplined on portfolio construction, and allow bottom-up stock selection - not market forecasting - to drive long-term returns.
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