The Fidelity Australian Opportunities invests in a diversified selection of around 40 to 70 Australian companies. The portfolio manager seeks attractive stock mispricings of all types, while avoiding a strong style bias. The portfolio is largely industry neutral with risk and return focused at the stock level. Designed to be a core holding.
Security selection in the materials and consumer discretionary sectors added notable value. Fibre cement producer James Hardie Industries reported a 4% growth in its global net sales for the year ending March 2023 and its results were in-line with the guidance. The company has a strong correlation with the US housing market, which is driven by interest rates. Indications that the interest rate cycle in the US may be peaking also supported its share price. The US housing sector remains undersupplied, and James Hardie Industries’ dominant market position supports its margins. Clean energy miner, IGO, tracked the strength in lithium prices, supported by a global decarbonisation theme and a transition to electric vehicles (EVs). The broad-based global strength in the IT sector, led by news flows around developments in AI, buoyed the position in cloud-based end-to-end logistics software provider, WiseTech Global. The recently increased position in franchise operator Collins Foods contributed to returns.
It continues to exhibit acceleration in same store sales growth and margin improvements in its European enterprises which buoyed investors. Conversely, the holding in beverage company, Treasury Wine Estates, slid as it reported mixed operating conditions in its recent trading update and flagged pressures in sales of its low-margin wine. Shares in IDP Education, which is the co-owner of the International English Language Testing System or IELTS, slid after the Canadian immigration authority allowed four additional English language tests, ending IELTS’ monopoly as means of attaining citizenship.
What is Fidelity Australian Opportunities Fidelity Australian Opportunities is an Managed Funds investment product that is benchmarked against ASX Index 200 Index and sits inside the Domestic Equity - Large Growth Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Fidelity Australian Opportunities has Assets Under Management of 347.44 M with a management fee of 0.85%, a performance fee of 0.00% and a buy/sell spread fee of 0.4%.
How has the investment product performed recently?
The recent investment performance of the investment product shows that the Fidelity Australian Opportunities has returned 4.49% in the last month. The previous three years have returned 6.75% annualised and 13.14% each year since inception, which is when the Fidelity Australian Opportunities first started.
How is risk measured in this investment product?
There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Fidelity Australian Opportunities first started, the Sharpe ratio is NA with an annualised volatility of 13.14%. The maximum drawdown of the investment product in the last 12 months is -4.4% and -26.13% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product?
Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Fidelity Australian Opportunities has a 12-month excess return when compared to the Domestic Equity - Large Growth Index of -0.7% and -0.38% since inception.
Does the investment product produce Alpha over its Peers?
Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Fidelity Australian Opportunities has produced Alpha over the Domestic Equity - Large Growth Index of NA% in the last 12 months and NA% since inception.
What are similar investment products?
For a full list of investment products in the Domestic Equity - Large Growth Index category, you can click here for the Peer Investment Report.
What level of diversification will Fidelity Australian Opportunities provide?
Fidelity Australian Opportunities has a correlation coefficient of 0.98 and a beta of 1 when compared to the Domestic Equity - Large Growth Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
How do I compare the investment product with its peers?
For a full quantitative report on Fidelity Australian Opportunities and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Fidelity Australian Opportunities with the ASX Index 200 Index?
For a full quantitative report on Fidelity Australian Opportunities compared to the ASX Index 200 Index, you can click here.
Can I sort and compare the Fidelity Australian Opportunities to do my own analysis?
To sort and compare the Fidelity Australian Opportunities financial metrics, please refer to the table above.
Has the Fidelity Australian Opportunities been independently verified by SMSF Mate?
This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
How can I invest in Fidelity Australian Opportunities?
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Comments from SMSF Mates
SMSF Mate does not receive commissions or kickbacks from the Fidelity Australian Opportunities. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - March 31, 2023 From 1 October 2022, Casey McLean took over as Lead Portfolio Manager of the Fund and Clare Coleman as Co-portfolio Manager on the Fund. The Fund delivered positive returns but underperformed the index over the quarter. Stock selection in the materials, real estate and consumer staples sectors held back gains. Rising interest rates weighed on the holding in global property and infrastructure developer Lendlease Group.
Specialty biotherapeutics company CSL faced selling pressure along with the rest of the healthcare sector. Shares in sustainable materials producer Calix fell. Investor sentiment was weighed down by the Federal Government’s withdrawal of its grant funding plans for its carbon capture, use and storage (CUSS) programme. The underweight allocation to iron ore miners Rio Tinto held back relative gains. Its shares advanced inline with rising iron ore prices. IGO slid on retreating lithium prices. Its Nova nickel-copper mine has stopped operations after a fire at the power station. It may take several weeks to restore power. On a positive note, the lack of exposure to low-cost hard rock lithium miner Pilbara Minerals proved beneficial as its shares declined in line with lithium peers due to retreating lithium prices. Investors accumulated shares in gold miner Evolution Mining amid rising gold prices and a slowing rate of interest rate increases as indicated by the US Federal Reserve. Elsewhere, the position in leading commercial insurance broker Steadfast Group added value as its shares advanced. Investors cheered its assetlight and scalable business model, with limited underwriting risk bearing. The position in medical device company PolyNovo advanced after it reported record sales volumes, primarily driven by its US business.
Performance Commentary - January 31, 2023 The Fund delivered strong positive returns and outperformed the index over the month, primarily due to stock selection in the healthcare and real estate sectors. Indications that the rising interest rate cycle led by the US Federal Reserve may have peaked led to a share price rally in property manager Goodman Group. Its quality assets and strong balance sheet position, coupled with ongoing structural growth opportunities cheered investors. Shares in medical device maker PolyNovo advanced as it reported record sales during the first half of the year. Market enthusiasm was also backed by management’s comments on headcount increases and market expansion, which supported growth in the second half of the year. The holding in nickel pig iron (NPI) producer Nickel Industries gained after it announced a strategic framework agreement for the execution of an electric vehicle battery supply chain with its major shareholder Shanghai Decent. The position in financial conglomerate Macquarie Group added value.
Investors were expecting strong income from its commodities and global markets (CGM) division as energy price volatility remained at elevated levels since November. Conversely, the position in Steadfast Group declined and gave back some gains from previous months as investors took profits in the leading commercial insurance company. Steadfast has an asset-light and scalable business model with limited underwriting risk. Shares in oil and gas producer Santos declined after its production guidance for 2023 was downgraded largely due to a temporary shutdown of its John Brookes platform in Western Australia. Leading telecommunication services provider Telstra detracted from performance. However, Telstra continues to enjoy a dominant position with leading market share across all the segments in which it operates.
Performance Commentary - December 31, 2022 From 1 October 2022, Casey McLean took over as Lead Portfolio Manager of the Fund and Clare Coleman as Co-portfolio Manager on the Fund. The Fund delivered positive returns but underperformed the index over the quarter. Stock selection in the materials, real estate and consumer staples sectors held back gains. Rising interest rates weighed on the holding in global property and infrastructure developer Lendlease Group. Specialty biotherapeutics company CSL faced selling pressure along with the rest of the healthcare sector. Shares in sustainable materials producer Calix fell. Investor sentiment was weighed down by the Federal Government’s withdrawal of its grant funding plans for its carbon capture, use and storage (CUSS) programme. The underweight allocation to iron ore miners Rio Tinto held back relative gains. Its shares advanced inline with rising iron ore prices. IGO slid on retreating lithium prices. Its Nova nickel-copper mine has stopped operations after a fire at the power station. It may take several weeks to restore power.
On a positive note, the lack of exposure to low-cost hard rock lithium miner Pilbara Minerals proved beneficial as its shares declined in line with lithium peers due to retreating lithium prices. Investors accumulated shares in gold miner Evolution Mining amid rising gold prices and a slowing rate of interest rate increases as indicated by the US Federal Reserve. Elsewhere, the position in leading commercial insurance broker Steadfast Group added value as its shares advanced. Investors cheered its asset-light and scalable business model, with limited underwriting risk bearing. The position in medical device company PolyNovo advanced after it reported record sales volumes, primarily driven by its US business.
Performance Commentary - September 30, 2022 Resources held back gains Within energy, the lack of exposure to coal miner Whitehaven Coal held back relative returns as its shares advanced in light of surging coal prices. With materials, Nickel producer Nickel Industries declined despite releasing in-line results. Investors remain concerned about its margin compression due to the resilience in thermal coal prices. Nevertheless, its earnings will continue to grow as its higher volume and margin stability thesis remains intact over the long term. Within materials, lithium prices reached record levels as supportive EV polices globally continued to support demand, while recent heat wavedriven power cuts in China negatively impacted supply in an already tight market environment. As such, the lack of exposure to lithium and tantalite mining company Pilbara Minerals held back relative gains. Conversely, these gains were partially offset by the position in IGO as surging lithium prices buoyed the position in clean energy focused miner.
Short-term weakness in structural growth winners Rising interest rates weighed on the position in industrial property manager Goodman Group; its shares declined in line with the broader real estate sector. Nevertheless, Goodman has quality assets and a strong balance sheet position, coupled with ongoing structural growth opportunities. Markets sold down travel shares amid concerns over rising cost of living and the subsequent impact on tourism. Consequently, the holding in offline travel agent Flight Centre Travel declined.
Robust stock picking added value Cloud-based end-to-end logistics software provider WiseTech Global advanced as it delivered promising results and robust guidance. It is a capital light business that enjoys self-funding from cash flows and is underpinned by large economies of scale and a strong balance sheet position. The conviction position in global specialty biotherapeutics company CSL outperformed the broader market amid investors’ preference for defensive health care stocks. The lack of exposure to toll road operator Transurban Group contributed to performance. Its shares declined as it announced disappointing dividend guidance.
Performance Commentary - June 30, 2022 The Fund underperformed the index over the quarter. Selected holdings in the materials sector held back gains, while selected conviction positions within communication services supported returns.
Materials held back gains
The position in gold miner Evolution Mining declined amid a weaker profit outlook for the company. It revised its production guidance downwards amid a delay at its Red Lake asset and cited inflationary pressures as it raised its cost guidance. Nevertheless, the company’s position is supported by its robust balance sheet and quality gold exposure. In addition, the weakness in the mining industry amid rising cost pressure led Nickel Industries lower.
Performance Commentary - March 31, 2021 The Fund delivered positive returns, but lagged the index over the quarter. The stock market rotated in favour of value stocks as a result of the expected post-pandemic normalisation and rising bond yields. Market rotation held back performance Shares in software-based elastic connectivity provider Megaport, slid. Investors overlooked its strong cash flows, healthy balance sheet and its long runway for growth from its digital infrastructure segment. In financials, the conservative exposure to banks, particularly Westpac Banking and National Australia Bank, weighed on relative returns given the strong rally in the four largest Australian banks over the quarter
Performance Commentary - December 31, 2020 The Fund delivered strong positive returns and outperformed the index over the quarter. Positive news flows around the development of a COVID-19 vaccine dominated investor sentiment and prompted a rotation into value stocks. Consequently, expectations of a swifter economic recovery supported selected conviction holdings. These gains were partly offset by selected commodity-led positions and a sell-off in selected holdings that had fared well in recent months.
Preferred commodity holdings added value
Conviction holdings in the materials sector, including positions in rare earths miner Lynas, Nickel Mines, steel producer BlueScope Steel and Mineral Resources enhanced gains. Lynas reported positive drilling results below its Mt Weld mine, a high grade operating rare earth mine with a long mine life. Nickel Mines entered into value accretive acquisitions for the development of projects in Indonesia. BlueScope Steel gained in light of an encouraging earnings guidance for the first half of FY21. Mineral Resources gained amid a surge in iron ore prices in light of robust demand from China. Conversely, not holding iron ore producer Fortescue Metals Group weighed on relative returns.
Vaccine-news driven value rotation held back returns
Vaccine related news weighed on gold prices, a relative safe-haven asset in volatile markets. Consequently, the position in gold producer Evolution Mining held back performance. A value rally in banking stocks was less favourable due to the lack of exposure to National Australia Bank. Against this backdrop, a round of profit taking weighed on the position in connectivity provider Megaport, which did well earlier in the year.
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