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Fidelity Select 50 Review

Topic: Investor Insights 19 April 2017

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63% of Fidelity's Select 50 funds have performed worse than at least half of all funds within the same sector.

63% of the 50 funds favoured by Fidelity’s experts and recommended in their influential Select 50 list, have performed worse than at least half of all funds within the same sector.

The Select 50 list has become a popular source of guidance for many seeking out investment ideas. But in order to provide investors with a clear understanding as to the quality of the funds they recommended, our research team analysed all 50 funds for both performance and sector ranking. In this article and attached free report we identify which of the funds in the Select 50 list have consistently achieved top performance within their sectors and which funds have underperformed.

 

The Fidelity Select 50

 

The Fidelity Select 50 was launched in July 2016 and provides a list of 50 recommended funds to help make it easier for advisers and DIY investors to make fund selections on their platform.

Run via Fidelity’s Personal Investing platform, the list rivals the Wealth 150 offered by Hargreaves Lansdown and contains 50 of the favourite funds that have been chosen by Fidelity’s multi asset team.

Funds in the Select 50 are chosen following a two-part selection process combining fund performance over different time periods as well as comparative performance, consistency of ranking against peers and qualitative research which includes site visits and manager meetings.

Tom Stevenson, investment director for personal investing at Fidelity International, said: “We have launched the Select 50, a list of high-conviction funds to help guide our investors when choosing funds to meet their long-term investment goals.”

With the increasing popularity of recommended funds lists our research team completed a comprehensive analysis of each fund within the Select 50 list.

  

About The Select 50 Fund Performance Review  

To provide a clarity on the funds listed within the Select 50 our research team analysed the 1, 3 & 5-year performance and sector ranking of each fund and provided them with a consistent performance rating based on the following criteria:

Top – Funds classified by Yodelar as top performing have consistently outperformed at least 75% of competing same sector funds over the course of the 1, 3 & 5 year periods analysed.

Mediocre – A mediocre performance rating is provided to funds that have managed to rank within the top 50% of funds in their sectors consistently over the 5 year period analysed. 

Poor – A fund will be provided with a poor performance rating if at any time during the 1, 3 & 5 year periods analysed they performed worse than 50% of competing same sector funds

 

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Select 50 Fund Performance Summary 

Based on the above criteria the below table provides an overview of the performance of each fund within the Select 50 list.

 

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Select 50 Funds That Have Impressed

As highlighted in the above table there are currently 8 funds within the Fidelity Select 50 list that have consistently outperformed at least 75% of same sector funds over the recent 1, 3 & 5 years. We view funds that have consistently delivered top quartile performance in comparison to their peers within the same sector to have proven their ability to excel and deliver for investors. 

One of the most impressive top performing funds within the Select 50 list has been the ‘Fidelity Global Special Situations’ fund. This fund has consistently outperformed 96% of same sector funds over the recent 5-year period. 

There are 6 North America funds listed in the Select 50, 2 of which have maintained consistent top performance. These funds were the ‘Old Mutual North American Equity U1’ and the ‘Schroder US Mid Cap’ fund and with 5 year growth of 156.46% and 137.57% respectively, they have both outperformed 95% of funds in the North America sector.

The Select 50 also features a number of Fidelity’s own managed funds and includes the impressive ‘Fidelity Global Special Situations W Acc’ fund. This fund is worthy of a place on any recommended funds list and has consistently delivered outstanding performance in comparison to its peers. Over the recent 5-year period this fund has consistently outperformed 96% of funds in its sector.

  

20% of Funds in The Select 50 List Are Fidelity’s Own Funds 

Fidelity state that the Select 50 features their favourite funds and it is perhaps no surprise that 10 of the funds listed are Fidelity’s own funds. But with 7 of their 10 funds performing worse than at least 50% of same sector funds during the recent 5 year period it does raise questions as to the legitimacy of the Select 50 list.

Among the range of Fidelity’s own funds that are included in the list is the ‘Fidelity Enhanced income’ fund, which is a UK Equity Income fund. This fund has consistently been an underachiever and over the recent 5-year period it has been outperformed by 87% of competing same sector funds. The ‘Fidelity Emerging Markets Equity’ fund is another of Fidelity’s funds to be included in the Select 50 list. This fund has suffered a steady decline in the rankings within its sector over the recent few years and with comparatively low growth of 28.45% over the past 12 months it ranked 206th out of 230 funds in the Global Emerging Markets sector.

 

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63% of Funds in the Select 50 List Have Underperformed

Our analysis of the Select 50 funds list identified that 28 funds have ranked within the bottom half of their sector for performance during the recent 5-year period. One fund to consistently underachieve was the ‘Franklin UK Smaller Companies’ fund. Over the course of the recent 5 years this fund has been outperformed by at least 64% of same sector funds. Another underperformer in the Select 50 list was the popular ‘M&G Corporate Bond’ fund. Over the recent 5 years this fund has consistently performed within the bottom 50% of its sectorand with over £4.2 billion of client money invested in this fund its inclusion in the prestigious Select 50 will only serve to direct more investment into this fund.

 

Summary

As a fund management giant who rank among the best for the performance of their own funds their favourite funds list was somewhat disappointing. As our analysis identified a sizeable proportion of the funds within the popular and influential Select 50 list have underperformed with a comparatively small proportion consistently delivering top performance.

As a direct rival to the Hargreaves Lansdown Wealth 150 list, which also contained some questionable fund choices, the Fidelity Select 50 should not be relied upon by investors or advisers who seek to make top performing fund choices. 

Join Yodelar and access all fund manager reviews. 

 

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