A diversified and concentrated portfolio of 20-40 Australian high-quality stocks
Uses a bottom-up research approach to invest in companies with a sustainable competitive advantage, strong pricing market power, supportive industry structure, and strong management quality.
Strong risk management is at the core of our investment approach
A 'best ideas' concentrated portfolio, with a strong focus on risk management
A diversified fund of some of Australia's most promising companies
Access to our 20+ years' expertise investing in the Australian market
Casey McLean, Portfolio Manager of the Fidelity Australian High Conviction Fund talks about how he became interested in investing and what excites him about managing a concentrated portfolio of Australian stocks.
Portfolio Manager, Casey McLean, talks about what the Fidelity Australian High Conviction Fund offers investors and explains his investment philosophy and process.
The quarter can be characterised by one with huge amounts of volatility. There was no shortage of market moving events.
Firstly, we had the unwind of the Japanese carry trade which caused a spike in the VIX index, the fear monitor, to levels we haven't seen since Covid. It caused the Australian market to climb by 2.1% which was the largest move in 17 months but paled in comparison to the Japanese market which was down 12.1%, the largest move since 1987. On top of that, you had Nvidia which is the most watched stock in the world, It was down 27% peak to trough. Iron ore was similar, falling by 20%. You had U.S. cutting interest rates and of course the war in the Middle East intensifying.
And yet, despite all that, the Australian market was able to grind out 6.5% return over the quarter which is actually the strongest return for a September quarter since 2013.
And at the fund level, we performed broadly in line with the market and the key contributors to that were the materials sector, which we went overweight in August, and that benefited from an announcement of large Chinese stimulus in September where they focused firstly on monetary policy but with promises of more fiscal measures to come and that led to a rotation out of banks and into materials.
Another key contributor was the IT sector where Wisetech in particular delivered very strong results, beating on both growth and margins and continued to perform after results.
On the detractors side, real estate was one where the sector performed quite strongly on the back of U.S. interest rate cuts and some of the stocks we held underperformed. And similarly, in financials, where the major banks performed well for most of the quarter and some of our insurance stocks underperformed.
The outlook for the market really pivots around interest rates. And the last quarter we saw some interesting moves with the U.S. starting their interest rate cutting cycle with a 50 bit cut and also cuts seen in New Zealand, China and a host of other small countries. Yet Australia held firm on interest rates. And this divergence really is in line with our long held view that Australian rates would be higher for longer. And that's really because interest rates haven't gone up as much in Australia and hence not as restrictive as in other countries and we have a larger output gap.
And what's really interesting at this point in the cycle is how it differs from normal interest rate cutting cycles. Firstly, in both Australia and U.S., valuations are at their highest level prior to an interest rate cutting environment, unemployment is also close to the lowest level and most of the cyclical indicators are much stronger. So you have to question, ‘is the normal sector rotation still in play?’
Join Portfolio Manager Casey McLean as he provides an update on Aussie markets post the announcement of global interest rate changes and looks at the main contributors and detractors to performance for the quarter.
You can get more information about the Fund's top holdings here.
See for yourself how the fund has performed since inception. The chart below represents the value now of $10,000 invested in the Fidelity Australian High Conviction Fund in July 2012 compared with $10,000 invested in the S&P/ ASX 200 Accumulation Index.
Chart as at: 30 November 2024
Total net returns represent past performance only. Past performance is not a reliable indicator of future performance. Returns of the Fund can be volatile and in some periods may be negative. The return of capital is not guaranteed. Benchmark: S&P ASX 200 Accumulation Index.
Net returns as at 30 November 2024
| Timeframe | 1 yr % |
3 yr % pa |
5 yr % pa |
7 yr % pa |
10 yr % pa |
Since inception (31/07/12) % pa |
|---|---|---|---|---|---|---|
| Fund | 22.96 | 6.42 | 7.06 | 8.34 | 9.52 | 10.91 |
| Benchmark | 23.42 | 9.55 | 8.28 | 9.24 | 9.08 | 10.20 |
| Active return | -0.46 | -3.13 | -1.22 | -0.90 | 0.44 | 0.71 |
Total net returns represent past performance only. Past performance is not a reliable indicator of future performance. Returns of the Fund can be volatile and in some periods may be negative. The return of capital is not guaranteed. Benchmark: S&P ASX 200 Accumulation Index.
Net as at 30 November 2024
| 1 yr % |
3 yr % pa |
5 yr % pa |
7 yr % pa |
10 yr % pa |
Since inception (31/07/12) % pa |
|
|---|---|---|---|---|---|---|
| Total return | 22.96 | 6.42 | 7.06 | 8.34 | 9.52 | 10.91 |
| Growth | 8.52 | -1.00 | 1.84 | 3.83 | 5.02 | 6.20 |
| Income | 14.44 | 7.42 | 5.22 | 4.51 | 4.50 | 4.71 |
Growth return is the unit price movement on exit to exit basis. Income is expressed as Total Return less growth component.
Total net returns represent past performance only. Past performance is not a reliable indicator of future performance. Returns of the Fund can be volatile and in some periods may be negative. The return of capital is not guaranteed. Benchmark: S&P ASX 200 Accumulation Index.
| Distribution | Distribution (CPU) | Reinvestment price |
|---|---|---|
| 30-Sep-24 | 5.9167 | $20.6637 |
CPU = cents per unit. The above cash CPU excludes imputation credits and foreign income tax offsets which are non-cash components and are reported in the end of year tax statement. If the Distribution CPU column is 0.0000 it means that nothing was distributed.
As at 31 October 2024
As at 31 October 2024
| % total net assets | |
|---|---|
| NATIONAL AUSTRALIA BANK LTD | 9.9% |
| CSL LTD | 9.7% |
| BHP GROUP LTD | 8.8% |
| COMMONWEALTH BANK AUSTRALIA | 6.6% |
| MACQUARIE GROUP LTD | 6.2% |
| GOODMAN GROUP | 5.9% |
| ARISTOCRAT LEISURE LTD | 5.0% |
| WOODSIDE ENERGY GROUP LTD | 3.8% |
| QBE INS GROUP LTD | 3.6% |
| DE GREY MINING LTD | 3.3% |
As at 31 October 2024
| Fund % | Benchmark % | Relative % | |
|---|---|---|---|
| NATIONAL AUSTRALIA BANK LTD | 9.9 | 4.9 | 5.0 |
| CSL LTD | 9.7 | 5.7 | 4.0 |
| ARISTOCRAT LEISURE LTD | 5.0 | 1.6 | 3.4 |
| GOODMAN GROUP | 5.9 | 2.6 | 3.3 |
| DE GREY MINING LTD | 3.3 | 0.1 | 3.2 |
As at 31 October 2024
| Fund % | Benchmark % | Relative % | |
|---|---|---|---|
| WESTPAC BANKING CORP | 0.0 | 4.6 | -4.6 |
| ANZ GROUP HOLDINGS LTD | 0.0 | 3.9 | -3.9 |
| COMMONWEALTH BANK AUSTRALIA | 6.6 | 9.9 | -3.3 |
| WESFARMERS LTD | 0.0 | 3.1 | -3.1 |
| RIO TINTO LTD | 0.0 | 1.8 | -1.8 |
| Organisation | Rating / Recommendation |
|---|---|
| Lonsec |
Investment grade4
The Lonsec report is only available to financial advisers, please contact us for a copy |
| Morningstar | Neutral5 |
| Zenith | Approved6 |
This Fund is subject to the risk of stock market fluctuations. Investors accessing the Fund through a master trust or wrap account will also bear any fees charged by the operator of such master trust or wrap account. Any apparent discrepancies in the numbers are due to rounding.
1Management costs and buy/sell spread are current as at the date of publication of this website. These fees may be subject to change in the future.
2Total returns (net) have been calculated using exit prices and take into account the applicable buy/sell spread and are net of Fidelity’s management costs, transactional and operational costs and assumes reinvestment of distributions. No allowance has been made for tax. Returns of more than one year are annualised. The return of capital is not guaranteed.
