By investing in companies where demographics are the key driver of growth over the next three to five years and beyond, co-managers Hilary Natoff and Nicky Stafford say the Luxembourg-domiciled portfolio can deliver superior long-term returns, with lower volatility than the market.
Natoff and Stafford have an investment universe of about 1,000 companies. While this is weighted towards healthcare and consumer stocks, the managers say there are also opportunities in the IT sector, which can benefit from increasingly wealthy and “internet-savvy” consumers.
Other segments include: agriculture businesses that are playing a role in supplying food to a growing population; aerospace companies, which are experiencing rising demand for aircraft engines; and emerging market banks, which are benefiting from growing numbers of savers.
The fund, an unconstrained portfolio of 50-80 stocks, invests in two types of company – what the managers call “winners of today” and “winners of tomorrow”. The first category includes larger, firms in developed markets, such as Baxter International, SABMiller and Novo-Nordisk.
The second features mid- and small-cap companies in new growth markets, which are “more local” in nature. Examples include Shenguan Holdings, a Chinese sausage-casing manufacturer, which is benefiting from rising meat consumption by the country’s burgeoning middle class.
By balancing exposure to these two types of companies, the managers say they can offer lower volatility than the broader market, with the potential for strong long-term growth.
Stafford said: “While we are looking to achieve superior returns, we are also keen to limit the downside risk. Demographic shifts have the advantage of being predictable and can tremendously enhance and sustain the long-term earnings power of those companies well positioned to benefit.”
Fidelity Funds Global Demographics is benchmarked against the MSCI AC World Index. The dollar share class has a minimum investment limit of $2,500 and an annual management charge (AMC) of 1.5%. The sterling share class has an AMC of 0.75% and a minimum investment equivalent to $1m.