The former IFA favourite languishes in the bottom quartile of its IMA Global sector over three and five years, which goes a long way in explaining why it has only one FE Crown.
Performance of fund versus sector over 5yrs
Source: FE Analytics
Podger, who made his name at Threadneedle running multiple equity portfolios, brings a wealth of experience and a strong track record to match. According to FE data, he’s significantly outperformed over 10 years, returning 130.06 per cent compared to 81.62 per cent from his peer group composite.
Performance of manager and peer group over 10 years
Source: FE Analytics
He’s also outperformed over three and five year periods.
Since taking over the portfolio, Podger has revamped the portfolio, shifting the majority of his holdings into US equities and further reducing his exposure to emerging markets. He has also eliminated any holdings in basic materials while adding to his exposure to consumer discretionary and healthcare stocks.
In the five years to Podger’s appointment, Fidelity Global Special Sits was a full 5 percentage points more volatile than its sector average, and lost significantly more in down markets. This greater emphasis on developed market and more defensive sectors should, Podger says, reduce this volatility.
“I don’t want to go out and massively bet on an upmarket or a downmarket,” he said.
“It feels like we’re moving in the right direction, but clearly this is a long-term project.”
While the manager says the fund still has a mid-cap bias, he feels larger companies in general, particularly in the US, appear relatively attractively valued.
“The US economy is on fairly solid footing,” he said. “There are concerns over how next year will look in terms of fiscal drag, but nobody actually expects that to be imposed. That’s something the US understand… they don’t want to hit that tipping point.”
However, Podger says there have been a number of issues plaguing emerging markets in the past year which make him wary of holding significant portions of his global fund in the sector.
“Growth has ground to a halt in Brazil, inflation is rampant in India, and we’ve had to get used to a lower rate of growth in China,” he said.
“That kind of change in the growth dynamic can squeeze corporate profitability. Emerging markets are naturally much more cyclical and I think it’s been a tough year for emerging markets.”
In contrast to his optimistic view on the US economy, the manager warns economic cycles will continue to be very short in the global economy and says the UK may need to take a softer line on austerity in order to facilitate growth.
“Japan illustrates the futility of constant monetary stimulus,” he said.
“It looks like we’ll be in a world where debt levels continue rising and now the soft line is actually becoming louder and gaining more credibility, while the hard line [austerity], is weakening.”
The fund has a minimum investment of £1,000 and an annual management charge of 1.5 per cent. The fund’s TER is 1.71 per cent.
While Tim Cockerill, head of collectives research at Rowan Dartington, points to Podger’s strong record, he thinks investors should be cautious before adding his fund to their portfolio.
“The one thing about Fidelity is that every time a new manager takes over a fund it’s a little bit like starting from scratch,” he said.
“They don’t have a strong house process and it’s very much down to the manager. Effectively, in my view, it’s kind of a new fund. I would wait and see.”