Plan sponsors may wish to consider whether this investment news has any implications for the investment options available within their plans. Sun Life Assurance Company of Canada purchases units of the fund listed below, which is established as a segregated fund under the Insurance Companies Act (Canada).
In the fourth quarter of 2023, Fidelity announced that Jeremy Podger, Portfolio Manager (PM) on the Fidelity Global Fund (the Fund), will be retiring on March 31, 2024. Podger has managed the Fund since November 2014. He manages the strategy in a Growth-at-a-Reasonable-Price (GARP) style with a diversified portfolio of 70-110 stocks.
By the end of March 2024, Podger will transition within Fidelity to a role as a Senior Advisor. In this new role, he will provide mentorship to portfolio managers and analysts. There is no timeline for how long he will act in this capacity before leaving Fidelity.
In late February, Fidelity announced the appointment of Patrice Quirion to manage the Fund after Podger’s retirement. Quirion joined Fidelity in August 2005 and has nearly 20 years of industry experience. Quirion specializes in global and international equities and has managed Fidelity’s Global Concentrated Equity strategy since 2013. That strategy has outperformed the MSCI All Country World Index on an annualized basis by 1.5% since Quirion assumed management on October 1, 2013.
Fidelity has indicated that there will be changes made to the investment approach after Quirion’s appointment. Of note are the following:
| Old | New | Implications | |
|---|---|---|---|
| Focus | Companies that make up 3 pillars: change (shorter-term, corporate events), value (medium-term, earnings growth and re-rating), unique businesses (longer-term, earnings growth). | Companies that exhibit a combination of Quality (predictable, durable, high returns, growing businesses) and reasonable valuations (trading below normalized long-term fair value). | Portfolio continues to offer a core exposure and may have greater emphasis on Quality factors. |
| Buy discipline | Stocks meet a minimum acceptable rate of return and fall under the change, value, or unique businesses pillars. | Consistent earnings growth; high profit margins; high ROE/ROC; low financial leverage; low earnings variability; attractive valuations; market leadership. | Buy discipline emphasizes specific fundamental factors. |
| Sell discipline | Thesis has played out and target price has been reached; Significant change in risk/reward balance; Thesis is proven wrong or changes materially | Target price has been reached and no additional upside can be realized; Change in fundamentals impacting valuation; Structural change in economic environment. | Similar criteria in sell discipline |
| Holdings | Typically 100-120 | Typically 50-70 | Portfolio is expected to be more concentrated. |
GRS Investment Solutions View:
Jeremy Podger’s departure from Fidelity is a significant event. The strategy has performed well over his nine-year tenure, consistently outperforming the MSCI All-Country World (Net) Index $Cdn, on a 5-year rolling basis.
Portfolio managers at Fidelity have great influence over how they manage a strategy from a style and risk standpoint. So, Quirion won’t adopt the current style of the Fund as managed by Podger. Instead, the strategy will shift to how Quirion manages global equity funds. As described in the table above, the goal is for the portfolio to retain the current bottom-up, fundamental, GARP-style approach.
We met with Quirion in April 2024 to discuss his approach to managing the Fund. Quirion uses a “contrarian” style where he identifies quality companies trading at discounts to long-term value due to temporary, short-term factors. We believe the Fund will have a greater focus on valuation and therefore a more of a value style tilt. The Fund will also have a more concentrated portfolio of 50-70 high conviction stocks. Quirion’s preference for managing more concentrated portfolios may lead to higher tracking compared to the benchmark.
We would have preferred that Fidelity announced the new PM sooner than they did. However, our initial view of Quirion’s appointment is positive. He has significant experience, a management approach that has similarities to Podgers’, and a successful long-term track record. Given the significance of the changes, we have placed this fund On Watch. We plan to meet with Quirion again later in 2024 to further assess the new approach. We will continue to monitor the fund closely and provide further updates as needed.
Do you have to take any action?
You and your members don’t have to take any action as a result of these changes.
Questions?
Please contact your Sun Life Group Retirement Services representative.
