Let’s put our cards on the table: it’s hard for us to get too excited about foreign funds. In fact, of Fidelity’s 31 options, only two are rated as "Buy", notes mutual fund expert Jack Bowers, editor of Fidelity Monitor & Insight.
The first is portfolio holding Fidelity Worldwide Fund (FWWFX). We like its 61% stake in U.S. stocks; it’s managed by Stephen DuFour in the same fashion as his domestic charge, the Buy-rated Fidelity Focused Stock Fund (FTQGX).
That brings us to Fidelity International Capital Appreciation (FIVFX) and its annuity twin VIP Int’l Capital Appreciation (FVJIC) — we’ve upgraded both this month. Expertly managed by Sammy Simnegar since 2008, it ranks among the top 2% of international stock funds.
Over the past 10 calendar years, the fund has beaten its benchmark as often as it has trailed it. But sticking with the fund is important because his bounce back years have tended to provide 4-5 percentage points of alpha, or outperformance. In other words, sell at your own peril!
While hardly a pedal-to-the metal growth investor, relative to his benchmark, Sammy’s tech overweighting (17.2% vs. 8.5%) certainly shows he isn’t timid. And if he were not mindful of valuations, he’d likely own more. Perceptively, he’s bought little energy (2%) as Sammy’s keeping a wary eye on slowing global growth.
With that in mind, he’s made a significant (15%) and profitable out-of-benchmark wager in U.S. stocks for the same reason we’re also sticking close to home: “[It’s] a plentiful source,” says the veteran manager, “of high-quality companies.” We agree, and now rate International Capital Appreciation Buy.
