Fidelity's Stock Selector Funds employ a fundamental investment strategy designed to deliver Fidelity's sector specialists' best ideas. Fidelity's sector specialists are experienced stock research analysts whose in-depth knowledge of their respective sectors allows for significant insight into the companies they research.
Each sector specialist manages an independent sector sub-portfolio of stocks that is then aggregated to form the diversified Stock Selector fund. The allocation of assets to each of the sector sub-portfolios closely corresponds to the weight of the sector within the fund's respective benchmark index. This is a "sector-neutral" approach to investing and helps to ensure that the sector specialist's ability to pick the best stocks in each sector is the primary source of alpha, or excess return of the fund relative to the return of the benchmark index.
The merits of a sector specialist, sector neutral investing strategy
Fidelity's sector specialists are able to tailor their analysis to sector specific fundamental drivers. In the energy sector, for example, a value approach to security selection may be an optimal alpha strategy. In the technology sector, however, a more optimal approach may be to focus on companies with the potential for surprisingly strong earnings growth driven by new product cycles.
A disciplined, sector neutral portfolio construction approach employing multiple sector specialists may also provide diversification benefits. A multi-sector specialist model includes a variety of investment styles, processes, and experience, which may ultimately lead to diversification in investment outcomes from each sector and across an entire portfolio.
Seeks to provide more consistent alpha
The sector specialist, sector-neutral approach seeks to limit the likelihood that sector volatility will influence performance, and focuses risk on stock selection, which has historically been a strength for Fidelity.
Fidelity offers six funds that employ a stock selector strategy.
|All-cap equity||Fidelity Stock Selector All-Cap Fund|
|Large-cap equity||Fidelity Balanced Fund|
|Large-cap value equity||Fidelity Stock Selector Large-Cap Value Fund|
|Mid-cap equity||Fidelity Stock Selector Mid-Cap Fund|
|Small-cap equity||Fidelity Stock Selector Small-Cap Fund|
|Value equity||Fidelity Value Fund|