Fidelity's Investment Strategy: A Conservative Approach?

Fidelity offers a range of investment options, including conservative funds, which are designed for investors who want to minimise the impact of market fluctuations while seeking income and potential capital appreciation. These conservative funds aim to achieve financial market gains with low relative risk, minimising losses while still offering opportunities for growth. Fidelity's conservative investment approach is reflected in its model portfolios, which cater to different risk tolerance levels, including conservative, moderate, and aggressive strategies. The company also provides single-fund strategies, such as the Fidelity Asset Manager® Funds and Fidelity Freedom® Funds, that offer diversification and can be tailored to an investor's risk tolerance.

Fidelity Growth & Income Portfolio

Fidelity's investment approach can be considered conservative in some aspects, and the Fidelity Growth & Income Portfolio (FGRIX) is a reflection of this. Here is some detailed information about the Fidelity Growth & Income Portfolio:

Investment Objective:

The primary objective of the Fidelity Growth & Income Portfolio is to balance both growth and income generation, providing investors with capital appreciation and dividend yields. This fund seeks to achieve this by investing in a mix of stocks and bonds, with a focus on well-established companies that can provide stable returns.

Asset Allocation:

The portfolio is diversified across various asset classes, including stocks, bonds, and cash reserves. While the specific allocations may vary over time, the fund typically holds a significant portion of its assets in equity securities of large-cap companies, which are generally considered to be more stable and established businesses.

Risk Management:

Fidelity's conservative approach is also evident in its risk management strategies. The Growth & Income Portfolio aims to minimise the impact of market fluctuations by focusing on income-oriented investments with a slight priority on capital appreciation. This means that while the fund seeks growth, it also prioritises generating steady income for investors. Additionally, the fund's investments in bonds and cash reserves help balance out the riskier equity holdings.

Performance and Returns:

The performance of the Fidelity Growth & Income Portfolio can be assessed by looking at its average annual total returns. While specific return figures were not readily available, the fund's objective is to provide moderate growth and income, and it is suitable for investors who can withstand moderate fluctuations in market values.

Suitability:

The Fidelity Growth & Income Portfolio may be suitable for investors seeking a balance between growth and income. It is important to note that all investments carry some level of risk, and investors should carefully consider their financial goals, risk tolerance, and time horizon before investing.

In summary, the Fidelity Growth & Income Portfolio reflects Fidelity's conservative investment approach by prioritising income generation, adopting risk management strategies, and seeking moderate growth. Investors should always conduct their own research and consult with a financial advisor to determine if this fund aligns with their investment objectives and risk tolerance.

Fidelity Total International Index Fund

The Fidelity Total International Index Fund (FTIHX) seeks to provide investment results that correspond to the total return of foreign developed and emerging stock markets. The fund typically invests at least 80% of its assets in securities included in the MSCI ACWI ex USA Investable Market Index and in depository receipts representing securities included in the index.

The fund has a Morningstar Medalist Rating of Gold, indicating a sound investment process and strong management team. It maintains a cost advantage over competitors, priced within the least expensive fee quintile among peers. As of December 27, 2024, the fund's Net Asset Value (NAV) was 13.52, with a 1-day return of +0.07%. The total assets under management were 13.5 billion, with a low distribution fee and a net expense ratio of 0.06%.

The top holdings of the fund as of October 31, 2024, include Taiwan Semiconductor Manufacturing Co Ltd, Fidelity Cash Central Fund, MSCI EAFE Index Future Dec 24, Novo Nordisk AS Class B, and Tencent Holdings Ltd. The fund falls under the category of Foreign Large Blend, with an investment style of Large Blend.

The 52-week range for the fund's share price was between 11.73 and 13.36, with a 52-week average return of 12.27%.

Fidelity Total Bond Fund

The Fidelity Total Bond Fund (FTBFX) is a core fixed income fund for investors seeking income and protection from stock market volatility. The fund focuses on high-quality investment, with at least 80% of assets in investment-grade bonds. The remaining 20% of assets are invested in below-investment-grade securities, enhancing the return potential.

The fund's co-managers, Ford O'Neil and Celso Munoz, adopt a conservative approach, balancing return potential against risk. This strategy seeks to align with an investor's expectation of a core bond fund. The fund has received recognition for its performance, with Morningstar awarding it their highest level of commendation as of May 31, 2024. Additionally, portfolio manager Ford O'Neil was nominated for the 2024 U.S. Morningstar Outstanding Portfolio Manager Award.

The Fidelity Total Bond Fund is part of the Moderate with Income asset mix offered by Fidelity. This mix is suitable for investors who want to minimise the impact of market fluctuations by adopting an income-oriented approach, while still allowing for some potential for capital appreciation. This mix includes other funds such as the Fidelity Corporate Bond Fund (FCBFX), the Fidelity Intermediate Bond Fund (FTHRX), and the Fidelity U.S. Bond Index Fund (FXNAX).

Fidelity offers two main strategies to create a diversified portfolio: model portfolios and single-fund strategies. The Moderate with Income asset mix falls under the model portfolios strategy, where investors can choose funds based on their risk tolerance and financial situation. This strategy provides illustrations of potential opportunities for greater risk-adjusted returns over the long term.

Fidelity Freedom Funds

Fidelity has been managing Freedom Funds since 1996 through a range of market cycles. The fund managers take a long-term approach to key asset allocation decisions while also reviewing each portfolio daily and making adjustments as needed. The funds' dynamic asset allocation helps increase the chances that the investments remain aligned with the needs of individuals saving for, approaching, and drawing down savings in retirement.

Fidelity Asset Manager Funds

Fidelity offers seven Asset Manager® funds, with equity exposure ranging from conservative (20%) to aggressive growth (85%). Each fund is named for its exposure to stocks, for example, the Fidelity Asset Manager 20% maintains an equity allocation of around 20%, while the Fidelity Asset Manager 85% maintains an equity allocation of approximately 85%.

Choosing the right fund depends on an investor's risk tolerance, time horizon, and investment goals. The Asset Manager 20% fund may be more suitable for investors who are less comfortable with risk or have a shorter time horizon, whereas the Asset Manager 85% fund may be better for those who are more comfortable with risk or have a longer time horizon.

The seven funds offered by Fidelity are:

• Fidelity Asset Manager® 85%
• Fidelity Asset Manager® 70%
• Fidelity Asset Manager® 60%
• Fidelity Asset Manager® 50%
• Fidelity Asset Manager® 40%
• Fidelity Asset Manager® 30%
• Fidelity Asset Manager® 20%

Frequently asked questions