L-R: Julia Faurschou, reporter at Investment Adviser, Dennis Pellerito, associate director of national accounts at Fidelity International, and Richard Romer-Lee, managing director at Square Mile Investment Consulting & Research
Launched in November 1980, the Fidelity American Special Situations fund aims to provide capital appreciation by investing in a diversified portfolio of US securities. Angel Agudo has managed the vehicle since December 2012, but this is the first year it has been a member of the 100 Club.
As the name suggests, Mr Agudo seeks unloved firms, an investment approach that has remained unchanged during his tenure. He recently told Investment Adviser: “I believe the stockmarket is inefficient at pricing companies that have gone through a troubled period and are consequently unloved and out of favour. It is often only when an improvement in a firm’s trading is visible that the market moves to reprice future growth prospects.
“I therefore favour firms that have gone through a period of underperformance, where little value is ascribed to their recovery potential, and there is strong relative upside/downside performance potential.”
This approach has paid off, with the vehicle outperforming its peer group and the S&P 500 index over several periods. FE Analytics data shows the fund delivered 171 per cent in the five years to October 26, ahead of the IA North America sector average of 120 per cent and the S&P 500’s 85.7 per cent rise.
Mr Agudo notes performance since he took over as manager has been driven mainly by stock selection in the healthcare, IT and industrials, and consumer staples sectors. IT was the fund’s largest group exposure at the end of September, at 24.8 per cent.
What the judges say
A big focus on “buying the right risk-adjusted names rather than just the right return names” has worked well, the judges said of this fund.
