Fidelity MoneyBuilder Growth
Fidelity MoneyBuilder Growth is an attractive UK equity holding.
Morse applies the same strategy he employed during his first reign here. He is predominantly a bottom-up stock picker and follows a growth-at-a-reasonable-price approach, but he does not shy from tilting the portfolio to reflect his top-down views. Dividend growth is key to his stock selection, primarily on the basis that the ability to deliver strong dividend growth going forward is a good indicator of the structural growth prospects of a business. Within the fund’s universe of FTSE All Share stocks, he thus seeks high quality, cash-generative companies with strong balance sheets and dividend growth. The fund can also invest up to 20% of assets overseas as opportunities arise, in which regard Fidelity’s European research team is a strong resource to draw upon.
Chakra’s investment style was largely similar, however, it lacked the focus on dividend growth. When he took charge, Morse spent the first half of 2007 re-shaping the portfolio accordingly, and, unsurprisingly the focus on quality and dividends has skewed the portfolio towards prominent FTSE 100 names.
Morse was able to prove his worth on board this offering between its launch in 1994 and his departure to M&G in 1997, and he’s picked up where he left off since his return in December 2006. The fund has substantially outperformed its Morningstar category rivals during those periods. Indeed, Morse’s outperformance since his return here reflects his strong stock-picking skills. The fund has held up far better than its typical peer during the recent downturn despite a fairly sizable weighting in financial stocks. That’s because Morse selected financially sturdy firms that he believed could weather difficult times. Companies with strong balance sheets such as Man Group exemplify this. The fund was also able to perform well despite its underweight position in the shining mining sector relative to peers in the category who capitalised on the rally (although mining shares have dropped sharply over the past three months, they have been one of the market's leading sectors during Morse's tenure). This was a macro call, founded on Morse’s view that the demand-pull inflation is driving this overheated sector and would slacken in the face of the credit-crunch and the need for prices to at least come closer to aligning with the marginal cost of production.
There is a lot to like at this offering. Morse’s extensive market experience and favourable records, the analytical backup he enjoys at Fidelity, and the fund’s below average total expense ratio all render it a worthy source of UK equity exposure.
