The new fund invests in firms that stand to benefit from long-term trends such as population growth, the ageing population and the emergence of new middle classes in developing countries.
Portfolio managers Hilary Natoff and Nicky Stafford will invest in 50 to 80 stocks where demographic issues are driving sustainable earnings growth. The managers believe they can deliver strong returns with lower volatility than the broader market through a combination of ‘winners of today’ and ‘winners of tomorrow’.
Winners of today are usually big companies listed in developed markets that are global leaders, having already benefited from demographic trends to build a proven track record of earnings growth and high returns, even in tough economic conditions. Winners of tomorrow are usually leaders in new growth markets, or innovators that bring new products to the market. These companies are often small to medium in size and linked more to the domestic economy rather than global economy. They will tend to have smaller weightings in the fund because their volatility may be higher.
The fund managers will monitor around 1,000 companies, including healthcare and consumer stocks where many companies can benefit from demographic changes. Other sectors include IT, where some companies will benefit from the growth in online shopping; agriculture-related businesses that will help to supply food to a growing populati; aerospace companies which are experiencing rising demand for aircraft engines as more people travel; and emerging markets banks which are seeing demand from a new generation of savers.
Investing on the basis of global demographics may appeal to investors who feel that his type of thematic fund can reap rewards. However, Fidelity has set a high minimum of £1m for the sterling share class while it builds a track record for the fund, so the only affordable share class is denominated in dollars.