Fidelity Australian Equity aims to achieve a return (before fees, costs and taxes) that exceeds the S&P/ASX 200 Accumulation Index over a period of five to seven years.
Shares in SEEK declined as the job listing portal reported lukewarm results for its financial year (FY) 2023. However, it is held for its strong execution track record, proven management team, robust balance sheet and capital light operations. SEEK has a long-term opportunity to continue to lift prices and expand into new markets. Similarly, WiseTech Global slid as the cloud-based end-to-end logistics software provider released lacklustre results. Nevertheless, its sticky and growing customer base and low penetration in a large total addressable market provides ample runway for growth in the future. Private hospital operator Ramsay Health Care’s share price tumbled as its management’s tone shifted noticeably from margin normalisation to uncertainty around margin growth into FY 2024. Nonetheless, Ramsay Health Care has market leading positions in Australia and France, providing leverage during negotiations with private health insurers and solutions for governments that are trying to reduce public waitlists, along with significant procurement benefits. Meanwhile, the lack of exposure to retailer Wesfarmers held back gains as investors responded positively to its FY 2023 results. Shares in Coles Group declined as the food and staples retailer’s results missed expectations. Its investors were cautious amid building cost pressures, subsiding food inflation, and ongoing operational risk associated with the construction and implementation of the Ocado and Witron facilities. On a positive note, the position in Domino’s Pizza gained after the pizza chain operator announced its annual results. Management confirmed that its same store sales growth re-accelerated across Australia, New Zealand, and Europe, which will lead to an improvement in margins across all regions. The foundation of its long-term growth ambitions and viability of its business model is the underlying health of its franchisee base. The holding in global industrial property company Goodman Group advanced following the release of its FY 2023 results.
Goodman Group reported a double-digit increase in earnings along with upbeat guidance for FY 2024. In addition, strong demand for large industrial properties to house stock for online retailers as well as data centre space for cloud computing and artificial intelligence buoyed sentiment. The lack of exposure to infrastructure company Transurban Group added relative value. Its results disappointed investors as management flagged higher corporate costs. Elsewhere, not holding ResMed enhanced relative gains. Its shares slid following its quarterly results, which were underpinned by weak gross margins for the sleep apnoea equipment manufacturer.
What is Fidelity Australian Equities Fidelity Australian Equities is an Managed Funds investment product that is benchmarked against ASX Index 200 Index and sits inside the Domestic Equity - Large Growth Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Fidelity Australian Equities has Assets Under Management of 5.28 BN with a management fee of 0.85%, a performance fee of 0.00% and a buy/sell spread fee of 0.4%.
How has the investment product performed recently? The recent investment performance of the investment product shows that the Fidelity Australian Equities has returned -0.2% in the last month. The previous three years have returned 4.52% annualised and 13.52% each year since inception, which is when the Fidelity Australian Equities first started.
How is risk measured in this investment product? There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Fidelity Australian Equities first started, the Sharpe ratio is NA with an annualised volatility of 13.52%. The maximum drawdown of the investment product in the last 12 months is -9% and -42.49% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product? Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Fidelity Australian Equities has a 12-month excess return when compared to the Domestic Equity - Large Growth Index of -6.08% and 0.68% since inception.
Does the investment product produce Alpha over its Peers? Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Fidelity Australian Equities has produced Alpha over the Domestic Equity - Large Growth Index of NA% in the last 12 months and NA% since inception.
What are similar investment products? For a full list of investment products in the Domestic Equity - Large Growth Index category, you can click here for the Peer Investment Report.
What level of diversification will Fidelity Australian Equities provide? Fidelity Australian Equities has a correlation coefficient of 0.98 and a beta of 0.88 when compared to the Domestic Equity - Large Growth Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
How do I compare the investment product with its peers? For a full quantitative report on Fidelity Australian Equities and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Fidelity Australian Equities with the ASX Index 200 Index? For a full quantitative report on Fidelity Australian Equities compared to the ASX Index 200 Index, you can click here.
Can I sort and compare the Fidelity Australian Equities to do my own analysis? To sort and compare the Fidelity Australian Equities financial metrics, please refer to the table above.
Has the Fidelity Australian Equities been independently verified by SMSF Mate? This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
How can I invest in Fidelity Australian Equities? 
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Comments from SMSF Mates SMSF Mate does not receive commissions or kickbacks from the Fidelity Australian Equities. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - May 31, 2023 The Fund outperformed the index over the month, primarily due to stock selection in financials and materials. Shares in leading insurer Suncorp Group gained on expectations of a handsome dividend post the completion of its asset sale. The sale will sharpen Suncorp’s focus on its core insurance business in terms of improving its risk position, pricing and claims. Clean energy miner IGO’s shares rallied after it reported record profits and operating earnings in the third quarter of its financial year 2023. The lack of exposure to National Australia Bank added relative value as its shares tumbled post its disappointing half yearly results. Its management noted that net interest margin (NIM) had peaked in the December quarter and said that it expects further pressure due to competition in mortgages and deposits, as well as funding headwinds. Similarly, not holding retail conglomerate Wesfarmers enhanced relative gains as its shares declined after management highlighted deteriorating macroeconomic conditions. Conversely, the holding in beverage company Treasury Wine Estates slid as it reported mixed operating conditions in its recent trading update and flagged pressures in sales of its low-margin wine. The position in Ramsay Health Care declined amid weaker than expected results for the third quarter of its financial year 2023.
However, Ramsay Health Care has market leading positions in Australia and France, providing leverage during negotiations with private health insurers and solutions for governments that are trying to reduce public waitlists, along with significant procurement benefits. Elsewhere, the lack of exposure to software company Xero held back relative gains as its shares advanced in line with the IT sector.
Performance Commentary - April 30, 2023 The Fund slightly underperformed the index over the month, primarily due to stock selection in financials, healthcare and communication services. Investors took profits in Domain Holdings on worries that vendors may lower their marketing spending on the real estate classifieds portal amid a downturn in the domestic housing market. The position in Ramsay Health Care declined amid concerns over the profitability of hospital operators in France after the Emmanuel Macron government contemplated a healthcare funding reform in the country.
However, Ramsay Health Care has market leading positions in Australia and France, providing leverage during negotiations with private health insurers and solutions for governments trying to reduce public waitlists, along with significant procurement benefits.
The lack of exposure to National Australia Bank pared relative gains as its shares rebounded along with the rest of the financial sector. Meanwhile, the holding in mining major Rio Tinto detracted from performance as its shares slid in line with declining iron ore prices. On a positive note, the underweight allocation to low-grade iron ore miner Fortescue Metals Group added relative value as its shares tracked iron ore prices lower.
Fortescue faces cyclical and structural headwinds, as decarbonisation trends favour high-grade iron ore over low-grade iron. Clean energy miner IGO’s shares advanced after it secured land from the government of Western Australia to build its proposed integrated battery material facility. Management also revealed that Wyloo Metals and IGO are in advanced discussions with a global battery chemical manufacturer that is interested in partnering on the project. Strong gold prices supported the position in gold miner Evolution Mining. It has a strong track record of generating value through the cycle by turning around undercapitalised assets that have been divested by major players in the sector to achieve returns that are above the industry average. Elsewhere, shares in leading vitamins and dietary supplements (VDS) company Blackmores rallied after it received an attractive takeover offer from Japanese company Kirin. The bid clearly reveals the strategic value in Blackmores’ assets perceived by offshore buyers who have an appetite for growth. The attractiveness of its premium brand, product attributes and distribution systems could lead to more bids as the company makes inroads into the China and Southeast Asia markets.
Performance Commentary - February 28, 2023 The Fund underperformed the index over the month, primarily due to stock selection in the consumer discretionary and materials sectors.
Shares in pizza chain operator Domino’s Pizza Enterprises slid after management reduced its same store sales growth and organic store rollout targets for financial year 2023. However, its established track record of leadership in digital innovation and delivery is expected to drive future growth. Gold miner Evolution Mining declined in line with falling gold prices. Nonetheless, it released in line results and reaffirmed its full year production and cost guidance. A bearish outlook for lithium prices failed to boost sentiment towards miners IGO. The clean energy miner IGO posted mixed half yearly results. Shares in Commonwealth Bank of Australia slid despite reporting strong half yearly results, including a double-digit increase in dividend and another considerable share buyback.
Investors took profits in the bank as its management noted that net intertest margins (NIM) had peaked in October 2022 due to strong competition in both mortgages and deposits. However, CBA remains the safest bet relative to big Australian banks, given its stronger-than-peers core banking franchise, solid brand and specific focus on catering to the youth demographic. The lack of exposure to QBE Insurance Group held back relative gains as its shares advanced in line with the booming insurance sector. On a positive note, the position in insurer Suncorp Group advanced. Investors were buoyed by its market leading positions in general insurance in Australia and New Zealand. Not holding National Australia Bank added relative value as its shares tumbled. Its significant exposure to business loans leaves it relatively more vulnerable than competitors in a deteriorating macroeconomic environment. Leading food and staples retailer Coles Group advanced after it posted solid half-yearly results. Its reported profits, which were boosted by rising food inflation, beat market expectations. The domestic staples sector is well positioned in the current environment and has demonstrated an attractive long-term return profile, driven by its oligopolistic structure, high barriers to entry and strong bargaining power. Elsewhere, Australia’s leading and incumbent infrastructure and mobile services provider Telstra Group gained as inflationbased prices of its services rose amid a stable competitive environment.
Performance Commentary - January 31, 2023 The Fund delivered strong positive returns and outperformed the index over the month, primarily due to stock selection in the real estate sector.
Indications that the rising interest rate cycle led by the US Federal Reserve may have peaked led to a share price rally in property manager Goodman Group. Its quality assets and strong balance sheet position, coupled with ongoing structural growth opportunities cheered investors. The position in financial conglomerate Macquarie Group added value. Investors were expecting strong income from its commodities and global markets (CGM) division as energy price volatility remained at elevated levels since November. Pizza chain operator Domino’s Pizza Enterprises extended its run and rose in line with the consumer discretionary sector. It has an established track record of leadership in digital innovation and delivery, which is expected to drive future growth. Investors accumulated shares in job listing portal SEEK given its attractive valuations. Market expectations that inflation may have peaked and could now be reducing boosted sentiment. Conversely, the position in leading telecommunication services provider Telstra and private hospital operator Ramsay Healthcare detracted from performance.
However, Telstra continues to enjoy a dominant position with leading market share across all the segments in which it operates. Ramsay’s fundamentals remain intact as it is expected to benefit from a steady recovery in activity levels over the next few years. Suncorp Group declined and gave back some gains from previous months as investors took profits in the leading insurance company. Suncorp’s new initiatives are likely to drive improvements in its core insurance business and accelerate its digital and data driven transformation.
Performance Commentary - December 31, 2022 The Fund delivered strong positive returns and lagged the index over the quarter. Selected positions weighed on relative returns.
Selected materials held back gains Pure-play electric vehicle (EV) battery stock IGO slid on retreating lithium prices. News of a fire incident at IGO’s Nova Power station overshadowed its commercial lithium production milestone. The underweight allocation to BHP Group held back relative gains. Shares in the diversified miner, with a portfolio weighted towards iron ore, advanced in line with rising iron ore prices. Shares in Coles Group tumbled despite reporting third quarter sales that met expectations, as investors remained cautious of rising inflationary cost pressures for the consumer staples sector.
Performance Commentary - November 30, 2022 The Fund outperformed the index over the month, primarily due to stock selection in health care and financials.
Hospital operator Ramsay Healthcare’s positive quarterly trading update buoyed investors. It noted that activity levels are improving across regions as COVID-19 related costs are reducing. Management expects a gradual recovery through 2023 and 2024, with more normalised operational conditions.
Within financials, not holding National Australia Bank added relative value. Its shares tumbled amid concerns over its significant exposure to business loans, which leaves it relatively more vulnerable than competitors in a deteriorating macroeconomic environment. Meanwhile, investors accumulated shares in gold miner Evolution Mining amid an improving outlook for gold prices and slowing rate of interest rate increases as indicated by the US Federal Reserve. It is well positioned to benefit in such an environment, given its robust balance sheet and quality gold exposure. Shares in Rio Tinto, a diversified miner with a portfolio weighted towards iron ore, advanced in line with rising iron ore prices
Performance Commentary - October 31, 2022 The Fund underperformed the index over the month, primarily due to security selection in the healthcare sector. Shares in specialty biotherapeutics company CSL and private hospital operator Ramsay Healthcare faced selling pressure along with the rest of the sector in the current environment of rising interest rates. However, CSL continues to gain market share by exploiting its sustainable competitive advantage in a highly concentrated plasma market, which exhibits a long runway of secular growth. Ramsay’s fundamentals remain intact as it is expected to benefit from a steady recovery in activity levels over the next few years.
Meanwhile, not holding NAB held back relative gains as its shares advanced in-line with the financial sector. Shares in leading food and staples retailer Coles Group tumbled despite reporting third quarter sales that met expectations as investors remained cautious of rising inflationary cost pressures for the consumer staples sector. The position in mineral sands producer Iluka Resources slid after it reported a decline in both production and sales for its third quarter ended September
On a positive note, shares in IGO gained on the back of record lithium prices. It is a pureplay electric vehicle (EV) battery stock and is strategically positioned to supply metals for the clean energy future. The lack of exposure to low-grade iron ore miner Fortescue Metals Group added relative value. Its shares declined after a sharp pullback in iron ore prices amid concerns over demand in China and increasing supply of the metal.
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