This is a core global technology fund with around 80 holdings. It invests in a mixture of the familiar technology mega-caps but also medium-sized and smaller companies as well. At least 50% of the fund’s holdings must be invested in sustainable companies.
Our opinion
Fidelity Global Technology is a core technology fund which has delivered excellent performance, far exceeding that of the IA Technology and Technology Innovations sector. Manager HyunHo Sohn is extremely experienced and has been running the fund consistently well for many years. This is a strong consideration for those seeking an active tech fund.
Company description
Fidelity International is a financial services corporation established in 1969. With offices in more than 20 countries, its product range spans mutual funds, defined contribution pensions, segregated portfolios and multi-manager offerings. Awarded the Elite Equities Provider rating in 2017, 2019 and 2020, Fidelity compensates managers on long-term performance, illustrating its intention to align interests with clients
Fund manager
HyunHo Sohn has more than 20 years investment experience. He began his career at Shinhan Investment Corp in South Korea, before moving briefly to Morgan Stanley. In 2006, he became a research analyst at Fidelity. HyunHo relocated to Hong Kong in 2010. His success as a research analyst was recognised early and, in 2011, he was given an internal technology pilot fund to run. In March 2013 he took over the Fidelity Global Technology fund and has been the manager ever since. HyunHo is a CFA charterholder and holds a Bachelor’s degree from Yonsei University.
Technology offers unique growth opportunities with a host of interesting product cycles and innovations, it’s a dynamic sector where active investing can generate alpha. The technology sector also screens well on many traditional ESG metrics.
HyunHo SohnFund manager
Investment process
Fidelity Global Technology holds many of the technology mega-caps but has a bias to small and mid-caps. There are 123 equity research analysts at Fidelity that HyunHo can use to help select stocks for the portfolio. HyunHo may also get ideas from industry conferences, regional fund managers, third-party research or quantitative screens.
Stocks in the portfolio fall into one of three buckets. The first is ‘Growth’, which typically makes up more than 50% of the portfolio. These companies will be long-term structural winners with disruptive technology and will often be expensive. It’s important to have a long-term time horizon with these stocks as they can be volatile.
The second bucket is cyclical companies which typically make up less than 30% of the portfolio. These are found in various sub-sectors and there is a preference for less capital-intensive cyclicals with stronger balance sheets. The investment time horizon for these firms will be short (12-18 months).
The final bucket is ‘Special Situations’, which typically make up less than 30% of the portfolio. These are companies which are either severely undervalued or have an upcoming catalyst.
Stocks are sold for one of four reasons: the stock has reached its price target and a review identifies no further upside; the investment thesis is broken; there is a better opportunity elsewhere; or environmental, social or governance issues (ESG) materially change the investment thesis.
ESG
ESG - Integrated
Sustainability analysis is integrated into the investment process. HyunHo conducts a thorough assessment and monitoring of ESG risks and opportunities. A minimum of 50% of the fund’s net assets are invested in securities with sustainable characteristics. Developed market issuers with an ESG rating of AAA-BBB from the MSCI or emerging market issuers with a rating from AAA-BB are deemed sustainable. Where MSCI does not rate a company, Fidelity Sustainable Ratings will undertake their own assessment. The fund excludes companies involved in the production or distribution of cluster munitions and land mines.
Risk
Like most tech funds, it is naturally underweight the tech mega-caps which individually make up more than 10% of the index. As a result, the fund has a natural bias to mid and small-caps.
The investment committee meets once a month to review the fund’s exposure. There is also a quarterly fund review by the Chief Investment Officer.
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