The fund was launched in 1980 but in 2003 it became too large for then manager Neal Miller’s investment style. Miller had a bias towards growth stocks within the small and mid-cap arena, using top-down themes and bottom-up research.
Fidelity then increased the fund’s initial charge to 5.25 per cent, made it unavailable for online investment and withdrew IFA commission on new business in an attempt to control the fund’s size.
Bob Haber, who took over from Miller in July, has a different style of management and he is likely to look for stocks higher up the market cap scale.
He tends to construct portfolios using a bottom-up approach, with more emphasis on valuation than Miller. He also relies on quantitative methods to identify the best stocks, although he will also take macroeconomic factors into consideration.
Fidelity believes Haber’s style can cope with a greater pool of assets so it has lowered the initial charge to 3.5 per cent and has reinstated adviser commission.
The US market has underperformed over the past few years and stocks have been expensive relative to other markets. Growth is slowing, which could have a negative impact on earnings, particularly small caps. The US consumer and the housing market are also causes for concern but on the plus side, interest rates expected to peak soon and corporate earning remain strong, which could help the types of companies that Haber prefers.