"We've seen major market volatility in early 2020, but I'm still optimistic about the fund's defensive-growth holdings—stocks backed by long-term earnings growth that I think can still hold up relatively well in turbulent markets," says Shilpa Mehra, portfolio manager of Fidelity® Trend Fund.
Playing defense doesn't mean just hiding out in utilities and consumer staples stocks, Mehra says, noting that she's been putting money to work in companies she thinks have potential for durable earnings growth, but also have customer stickiness, competitive moats, regulatory barriers, and other defensive characteristics.
Mehra notes that Fidelity's quantitative research team defines "defensive growth" as stocks of companies with historically strong earnings and sales increases, lower-than-average price volatility, and strong measures of quality—regardless of sector.
A good example of a defensive-growth name in the fund, as of February 29, was Mastercard (MA). She believes the payment network provider can grow longer term, driven by digital-payment trends. She also thinks it's built a global network that gives the company a competitive advantage.
"I continue to seek out others I want to hold for the longer term and that are offering what I see as good value when I look out 3 to 5 years," she says.
As of February 29, 2020, Mastercard composed 4.22% of fund assets in Fidelity® Trend Fund.
Because of their narrow focus, sector investments tend to be more volatile than investments that diversify across many sectors and companies.
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Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.
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