The tech fund that barely fell

How Fidelity Global Innovators stayed afloat, and the resilience of exciting names

Andrew Willis 17 April, 2020 | 1:53AM
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Editor's note: Read the latest on how the coronavirus is rattling the markets and what you can do to navigate it.

Andrew Willis: 
In times of uncertainty and significant downside risk, a high-risk tech fund is not the first choice for investors as a safe haven. But sometimes, high-risk funds outperform. Take for example Mark Schmehl’s Fidelity Global Innovators Class F. As of April 6, the S&P/TSX 60 dropped a painful 17.25%. The fund? Around one percent. How? 

For one, manager Mark Schmehl is a well-regarded portfolio manager in the technology and innovation space, returning a staggering 41.32% with this fund in 2019. The names that he picks get a lot of love, and it turns out that it’s hard for investors to let go. His funds have Morningstar Quantitaive Ratings of Bronze and Silver. 

Despite the recent market drawdown, names like Apple (AAPL), Shopify (SHOP), and Zoom video communications (ZM), will likely continue to trade at high valuations.

Taking a look at the fund’s factor profile, we can see that you’re in for high momentum and volatility, which works great in uptrends – and no-to-so great in downmarkets. That said, this has been a different kind of downmarket. We’ve seen some stocks skyrocket in a new kind of consumer environment, and a lot of those stocks happen to be innovators.

Ian Tam, Morningstar’s Director of Investment Research says that while valuations can remain high, it won’t necessarily mean a smooth ride. You’ll want to make sure your investments fit in with your broader asset allocation and risk profile.

For Morningstar, I’m Andrew Willis

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Apple Inc224.14 USD-0.08Rating
Fidelity Global Innovators Cl F38.25 CAD-0.18Rating
Shopify Inc Registered Shs -A- Subord Vtg62.19 USD-1.54Rating
Zoom Video Communications Inc58.39 USD-0.82Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar Canada. He previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @Andrew_M_Willis.

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