Fund Spotlight: long-term winner for navigating tricky times

The air of uncertainty that loomed over global markets in the first quarter of the year has not yet shown any sign of passing over.

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Investors continue to digest the ever-evolving news flow regarding the US-led trade war and no trade deals have been completed. As a result, the International Monetary Fund (IMF) last week cut its global growth forecast for 2025 to 2.8% from the 3.3% projection in January.

Investing in times of volatility provides a dilemma for investors seeking to deploy new capital into the market.

One fund designed to give investors a smoother ride through market cycles is Fidelity Global Dividend, and now is a good time to review and explore how the fund is holding up in this recent bout of volatility.

Since the inception of the strategy in 2012, the fund has been led by Dan Roberts. He brings over 20 years of dividend experience to the fund and is supported by the extensive research team and resources at Fidelity.

The fund aims to achieve a mix of growth and income with low volatility versus the MSCI All Country World (ACWI) Index. The income aim is for 25% more than the income produced by the companies included in the index. From an income perspective, the fund's yield fell as low as 2.2% in the aftermath of the Covid pandemic but has since been rising steadily to a level of 2.6% today.

What does the fund invest in?

Management has an unconstrained remit and can invest globally across the 2,500 constituents of the MSCI ACWI index. The focus is on companies that offer a healthy dividend yield underpinned by a growing level of income, as well as the potential for capital growth. Companies that demonstrate pricing power and robust balance sheets are favoured and those companies that hold large amounts of debt are avoided, which has proved a helpful feature of the investment process recently.

As of March 2025, the fund had a relatively concentrated portfolio of 44 quality larger company stocks invested across different regions. The largest exposure and overweight position is to Europe (48% of the portfolio). North America (27% of the portfolio) is the second-largest allocation and an underweight position relative to the benchmark. The allocation to the UK is also significant at 16% of the portfolio compared to 3.4% for the MSCI All Country World Index. Given the current tariff negotiations, it's worth noting that the portfolio holds no listed Chinese companies.

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The fund is defensively positioned in terms of sectors, with the largest positions in Financials (27%), Industrials (18%) and Consumer Staples (14%). The fund has a healthy proportion of service businesses relative to goods businesses, which have been less impacted by tariffs. Due to the cyclicality of their business models and high valuations in some cases, the fund also has no position in the Magnificent Seven stocks, which differentiates it from many global equity funds.

The fund has a high active share of 94%, meaning the fund’s holdings deviate from the benchmark index. The beta of 0.81 means it is less exposed to systematic (overall market) risk, which is one of the main objectives for the manager.

Within the top 10 holdings there are some interesting examples such as Unilever (LSE:ULVR), which has a bias towards emerging markets and positions itself for long-term profit margin growth. The fund also owns a stake in leading European exchange Deutsche Boerse AG (XETRA:DB1).

How has the fund performed?

Roberts boasts a robust track record, driven by excellent stock selection. Since inception (January 2012), the fund has delivered an annualised return of 11.4% versus 7% for the MSCI All Country World Index and ranks in the top quartile among peers over a 10-year period. The fund has delivered when quality and more defensive stocks were doing well, while it has lagged at times when cyclical stocks have rallied.

During the Covid pandemic market sell-off the strategy demonstrated resilience as its defensive exposure and effective stock selection offset the negative contribution from being underweight US stocks. The fund did underperform in 2023 and 2024, which is to be expected given that these were generally strong years for global growth stocks.

In the first quarter of 2025, the fund has returned 3.6% versus the MSCI All Country World Index fall of -4.3% with the fund’s defensive characteristics achieving a positive outcome for investors.

Source: Morningstar Total Returns (GBP) to 31/03/2025. Past performance is not a guide to future performance.

Why is the fund in the Super 60?

This fund benefits from an experienced manager with a well-structured process and has delivered a convincing track record since inception. Its objective of dividend growth has also been met, with dividend growth achieved every year since inception.

This fund may offer balance and complement a portfolio with an allocation to global growth strategies. Being value oriented, truly globally diversified and holding no positions in the Magnificent Seven, it represents a differentiated exposure from its mainstream global equity peers.

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This global dividend strategy is well equipped to deal with uncertainty and volatility present in the current market environment. The yield on offer from this fund is modest versus other income strategies, however the focus on dividends and dividend growth can enhance stability and play a key role in providing diversification in an uncertain environment.

This fund can be found on ii’s Super 60 list of investment ideas. Please find the latest factsheet here.