Fidelity UK Select W Acc

Why we like the fund

Aruna Karunathilake is a Quality Growth manager running c.40-60 UK stock portfolio. He seeks to own good businesses for the long term and so spends much time understanding the competitive market environment for these companies which could be disrupted by new tech or businesses. His investment approach is structured around a scorecard method which provides a solid framework for assessing new ideas and refreshing and sense checking existing holdings. The PM has worked at Fidelity since 2000 and is a well established member of the UK equity team. Fidelity has developed one of the industry’s largest research operations with c.130 equity research professionals spread across various locations globally. It has a strong research platform and access to companies. Risk management is considered an important part of the fund’s process, the PM participates in a Quarterly Fund Review chaired by the CIO, which is also attended by a member of the Portfolio Construction and Risk Team. This review covers portfolio construction, liquidity, positions, trading activity, characteristics, style and risk in considerable detail.

How to use the fund

The fund tends to do best when Quality Growth sectors perform well versus the broader market and so in turn we expect it to lag in markets which are cyclically driven. In other words when sectors such as Oil and/or Banks are in favour it will tend to lag as it has little exposure here but when good quality companies, those with strong brands and robust balance sheets are in vogue, it will tend to perform best. It can be a powerful combination to hold this fund with a value biased fund as they will work in opposite ways but in combination may give a smoother return profile over the long term.