2 / 5 Stars
1 1 2 4 4
Zacks Investment Research
1 (Strong Buy)
Standard & Poor's
2 / 5 Stars
#7 in Miscellaneous Region
U.S. News evaluated 17 Miscellaneous Region Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.
The fund has returned 9.69 percent over the past year, -1.07 percent over the past three years, 15.27 percent over the past five years, and 8.83 percent over the past decade.
|Trailing Returns||Updated 02.28.2014|
|Year to date||0.6%|
|3 Years (Annualized)||-1.1%|
|5 Years (Annualized)||15.3%|
|10 Years (Annualized)||8.8%|
The Fidelity Canada fund has a lot going for it. It’s posted a hefty 14 percent annualized return over the past decade. But in recent years, the fund—which invests strictly in Canadian, most large-cap equities—has had trouble beating the returns of the broad Canadian market.
As of March 05, 2014, the fund has assets totaling almost $2.34 billion invested in 88 different holdings. Its portfolio consists of mid- and large-cap stocks of well-known Canadian companies.
Doug Lober took over at the fund in late 2008, right as the market was spiraling downward. Lober mitigated the fund’s losses somewhat by selling before the bottom. He waited too long in 2009 to reenter the market, however, so the fund gained just 39.6 percent that year while the Toronto Stock Exchange gained 59 percent. Some of the difference in returns is attributable to the fact that the fund invests in larger, more stable Canadian companies, which didn’t fall as hard as others in the downturn and then didn’t have as far to rebound. Particularly successful holdings have been auto parts maker Magna International and Valeant Pharmaceuticals International, both of which saw their share prices double during 2010. The fund has returned 9.69 percent over the past year and -1.07 percent over the past three years.
It’s hard to attribute the fund’s lofty long-term returns strictly to management, since the Canadian market has been one of the hottest developed markets in the last decade. Although the fund’s 10-year annualized return compares favorably with that of the S&P/TSX Composite, which measures the Toronto Stock Exchange, this is primarily because large energy and industrial resource stocks, which make up more than 40 percent of the fund’s portfolio, have done so well. With higher values than a decade ago, these stocks might take a back seat in the future to other areas of the economy. Investors still intrigued by the fast-growing Canadian economy might be better off checking out the BMO Dow Jones Titans 60 Index, which tracks nearly the same 60 largest companies on the Toronto Stock Exchange for almost a tenth of the cost.
The fund normally invests up to 80 percent of its assets in Canadian securities or those tied to the Canadian economy. It invests up to 35 percent of its assets in any industry that accounts for more than 20 percent of the Canadian market. This means it focuses almost exclusively on the largest stocks in the economy, but it has an eye on mid-cap and growth stocks specifically.
Role in Portfolio
Morningstar calls this fund a specialty fund because it’s devoted to a single small market rather than a diverse range of investments.
With an M.B.A. from Columbia and a PhD from Yale, portfolio manager Doug Lober has the credentials that many investors trust. Lober has been with Fidelity since 1986, beginning as an analyst, but he took the helm at the Canada fund in September 2008, right as the market crashed. According to Morningstar, this fund has one of the largest research staffs in Canada.
Fidelity® Canada Fund has an expense ratio of 1.18 percent.
The riskiness of this fund is represented in the name. Because it invests in just one market, the fund will not likely escape from a bad Canadian business cycle. A high percentage of the portfolio is invested in natural resource companies, which could also hurt it if global demand falls or the resource-hungry economies of India and China stall out.