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Fidelity Germany A-Dis-EUR

Analyst Report
Morningstar's Take
|16/08/2022

by Natalia Wolfstetter


Fidelity Germany benefits from an experienced manager with strong stock-picking skills and extensive analytical support. The strategy retains its Morningstar Analyst Rating of Gold for cheaper share classes, while pricier retail share classes land at Bronze.Christian von Engelbrechten has managed this strategy since 2011, yet his involvement with the fund goes back to 2005, when he joined Fidelity as an analyst covering German stocks. Fundamental company research is at the heart of the approach, and here the manager relies extensively on Fidelity’s Europe-equity analysts, who provide in-depth coverage of the fund’s investment universe (HDAX). The appointment of a new comanager, Tom Ackermans, effective August 2021, provides additional, dedicated support to the strategy and helps reduce key-person risk, though we note that Ackermans retained his coverage responsibilities (US payments, fintech, and exchanges), which are less geared towards the German stock market.Von Engelbrechten focuses on companies’ ability to deliver structural growth. He seeks quality firms with healthy balance sheets and clear competitive advantages, as reflected in an above-average return on invested capital and profit growth. Yet the approach is not applied dogmatically. Deviations from the HDAX can be meaningful, but the manager keeps the benchmark in mind when constructing the portfolio. While the quality growth bias is clearly reflected in the portfolio through above-average growth, quality, and valuation metrics, it has been reined in since the fund suffered a severe underperformance in the value-oriented market of 2016. We believe this makes sense within the limited investment universe of a German equity fund. It curbed, though didn’t prevent, the fund’s underperformance amid the recovery of value stocks in the latter part of 2020 and 2021.Performance is predominantly derived from stock selection, which has generally been strong over the manager’s tenure. Thanks to his quality bias and effective execution, the fund has often been more resilient than peers and the benchmark in challenging conditions, including the first quarter of 2020 and the first half of 2022.

Morningstar Analyst Rating™
To find out how Morningstar rates a fund click here.
Portfolio RoleSpecialty.
Morningstar Pillars
PeopleAbove Average
The appointment of a comanager could help to reduce key-person risk.
ParentAbove Average
Changes to senior management need monitoring, but we consider Fidelity International an above-average parent.
ProcessHigh
The fund pursues a well-thought-out and consistently implemented bottom-up approach.
Performance
Under the manager's tenure, the strategy has served investors well.
Morningstar Analyst RatingMorningstar evaluates funds based on five key pillars, which it's analysts believe lead to funds that are most likely to outperform over the long term on a risk-adjusted basis.
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A fim de prover consistência para todos os relatórios fornecidos por diferentes Asset Managers, os data points calculados apresentados são gerados usando uma metodologia de cálculo proprietária da Morningstar, que pode ser conferida com mais detalhes em(https://www.morningstar.com/research/signature)