Steve MacMillan is cautious as the U.S. equity market is in a bearish mood

The manager of gold-rated Fidelity Small Cap America fund looks for companies that have high sustainable cash flows and high returns on equity supported by strong competitive advantages

Michael Ryval 20 December, 2018 | 6:00PM
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While U.S. equity markets have been in a bearish mood for a few months, Steve MacMillan, a U.S. equity specialist at Toronto-based Fidelity Investments ULC, has been cautious for some time. He’s patiently looking for buying opportunities to position the $2.5 billion gold-rated  Fidelity Small Cap America Series F for the next re-bound.

“The fund is generally positioned more cautiously and always looking for corrections in the market,” says MacMillan, a portfolio manager who assumed the fund in April 2011. “Rather than having a view that I should make a market call, this is more a strategy to focus on capital preservation. Over the past six months or so I have been rotating out of stocks that had become too expensive, or had valuation risk, or were more economically sensitive. On the margins, I have added some utilities and real estate investment trusts [REITs]. But if you look at the turnover of the fund, it’s usually about 20% a year”, he says.

“It’s not like I wake up one day, and say, ‘I need to totally change what I’m doing,’” says MacMillan, an 18-year industry veteran who graduated in 2000 from Wilfrid Laurier University with a bachelor of business administration and who joined Fidelity as a banking analyst in 2008. “This low turnover [ratio] really forces me to think like a long-term investor. And that allows me to ignore the benchmark.”

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Grand Canyon Education Inc91.58 USD-0.53
Hanesbrands Inc16.84 USD-0.30Rating

About Author

Michael Ryval

Michael Ryval  Michael Ryval, a regular contributor to Morningstar, is a Toronto-based freelance writer who specializes in business and investing.

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