Fund In Focus: Fidelity Canadian Large Cap

The fund's style falls out of favour from time to time, but not losing as much as its benchmark and peers in down markets more than makes up for lagging them in up markets.

Ruth Saldanha 12 October, 2023 | 4:38AM
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This fund is a part of the latest Morningstar Prospects. Read more about Morningstar Prospects here.

Five-star, silver-rated Fidelity Canadian Large Cap is an equity fund that has a value-oriented strategy that aims to invest in companies that the portfolio manager believes to be undervalued by the market. According to Fidelity, the fund is managed with an aim to weather market volatility and has the flexibility to invest up to 49% in foreign markets.

The fund came to Morningstar analysts Michael Dobson and Danielle LeClair’s attention because of its manager Dan Dupont. Dupont is known to Morningstar from his contributions as a sleeve manager in analyst-covered funds. “His strict downside protection-oriented philosophy stands out relative to Fidelity’s GARP and Growth managers, while his strong results set him apart from other value-oriented peers,” Dobson and LeClair write.

So far in 2023, the Fidelity Canadian Large Cap has returned 1.51%, while the category has returned 4.19%. The fund has a management expense ratio of 1.11%.

Growth of $10,000

Why is Fidelity Canadian Large Cap Worth Considering?

Fidelity Canadian Large Cap's bottom-up, concentrated large-cap style focuses on mitigating downside risk.

“Dupont has been the fund's sole manager since March 2011 and relies on Fidelity's extensive analyst pool for ideas and stock selection. He displays remarkable consistency and discipline throughout changing market environments. By seeking to preserve capital by investing in quality companies, he has produced equitylike returns here with less volatility than peers,” Dobson and LeClair say.

They note that Dupont will hold more cash than peers when valuations get high, which can drag on performance, but this also allows him to deploy capital quickly when markets retreat. For example, in December 2019, cash topped 20% but dropped to less than 5% at the end of March 2020 in the COVID-19 crash.

“The fund's style falls out of favour from time to time. But not losing as much as its benchmark and peers in down markets more than makes up for lagging them in up markets,” they write.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Fidelity Canadian Large Cap Sr F54.54 CAD-0.02Rating

About Author

Ruth Saldanha

Ruth Saldanha  is Editorial Manager at Morningstar.ca. Follow her on Twitter @KarishmaRuth.

 
 
 

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