Morningstar

Fidelity Italy A-Dis-EUR

Analyst Report
Morningstar's Take
|31/05/2024
by Francesco Paganelli
Fidelity has announced changes to its manager lineup following Karoline Rosenberg's imminent departure from Fidelity International after 17 years at the firm. Rosenberg will join the firm's US sister company, Fidelity Investments, as managing director of equity research, effective May 26, 2024. Rosenberg had a lead portfolio manager role on the firm's Iberia strategy. As a result of her departure, Alberto Chiandetti, lead portfolio manager on Fidelity Italy, will take over responsibility for that strategy alongside Andrea Fornoni, who has worked alongside Chiandetti for around 10 years and is deputy manager of the Fidelity Italy strategy and lead manager on Fidelity Switzerland. While Chiandetti has extensive experience in the Italian space, this additional appointment represents a substantial expansion of his remit and a significant increase in his workload, in our view. As a result of this announcement, we have placed Fidelity Italy under review while we evaluate the upcoming change. The strategy previously earned a People Pillar of High.
 
Fidelity Italy remains a good option in its Morningstar Category, but its skipper’s added workload lowers our conviction.

Lead manager Alberto Chiandetti is a talented and experienced investor with a firm grasp on Italian stocks. We retain a positive view on the manager, who has run this portfolio since 2008 to good effect, but given the research-intensive process adopted, we think there’s a risk he may be stretched too thinly going forward. Owing to the departure of previous manager Karoline Rosenberg, Chiandetti took responsibility for the firm's Iberia strategy in May 2024 alongside Andrea Fornoni, and the duo also started running a European equity mandate in early 2024. Fornoni has worked alongside Chiandetti for a decade and is deputy manager of the Fidelity Italy strategy and lead manager on Fidelity Switzerland. The additional workload is disappointing and somewhat concerning, given Chiandetti’s underwhelming results when he was running multiple strategies last time. Also, key-person risk remains high. Still, we think there’s ground for confidence, as the manager can also count on the support of a vast organization.

Chiandetti’s ability to rely on Fidelity's well-resourced research team is another key competitive advantage. The manager's stock-selection process plays to the group's strengths by relying on deep fundamental research, which he often instigates or conducts himself, especially in the small- and mid-cap segments. With meaningful active weightings on his highest convictions, Chiandetti typically builds compact but well-diversified portfolios of around 35-45 names, blending growth, cyclical, and restructuring firms, picked individually from across the market-cap spectrum. As such, stock selection is likely to add the most value. His contrarian, eclectic approach to stock-picking and mindfulness for valuations often set this portfolio apart, though it can also lead to short-term underperformance. Chiandetti's stretch of disappointing results in 2017-19 severely tested investors' nerves. Recently, though, the strategy has performed more in line with our expectations, outpacing its benchmark as well as 80% of its category peers over the trailing five years through April-end 2024, thanks to a combination of favorable sector positioning and effective stock-picking. All in all, investors benefit here from a sensible investment process executed by a veteran manager with deep knowledge of the Italian equity market, but his workload bears watching.
 
Morningstar Medalist Rating™The strategy’s appeal persists, even if diminished.
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Morningstar Pillars
PeopleAbove Average
ParentAbove Average
ProcessAbove Average
 
Morningstar Medalist RatingMorningstar assigns the Medalist Rating to funds that are qualitatively and quantitatively assessed through manager research and algorithmic processes. The assessment turns on three key “pillars” – People, Process, and Parent – that yield an estimate of how well a fund will perform before fees but after adjusting for risk.
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