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Fund Review: Fidelity Event Driven Opportunities Fund
3/25/2019 5:59:45 AM
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Objective research, analysis, and insight on investment funds in Canada from an acknowledged industry expert

By Dave Paterson  | Wednesday, December 26, 2018


Every month in my Top Funds Report newsletter, I write a summary of my views about specific funds and fund companies based on queries from readers. These are often funds that have undergone management changes or are new issues, a little less well known, or not as widely covered as some of the high fliers. Here’s a look at a Fidelity fund with a unique strategy.

Fidelity Event Driven Opportunities Fund

This is one of those funds that is hard to categorize. It’s classified as a U.S. Small/Mid-Cap fund, but that may not always be the best place for it. It has a unique mandate that looks to take advantage of corporate events that can help unlock shareholder value, including spinoffs, mergers, index additions or deletions, and 13-D filings.

A 13-D filing provides notification that a person or group has taken an interest of more than 5% in any class of a company’s shares. These types of events can provide outsized profits if you’re able to identify them early. This is because in some cases, there may be forced buying or selling, which can create share price movements.

In some cases, the companies may be under-followed by the analyst community, which can create an inefficiency that allows the manager to benefit as the broader market begins to recognize the potential impact of the event. These types of opportunities don’t adhere to any set schedule – they can play out very rapidly or take a long time to develop. And this means that the fund’s managers must be very nimble indeed.

Performance of the fund has been solid, with a 3-year average annual compounded rate of return of 6.6%, ending Nov. 30. However, the fund can be more volatile than the broader market, as recently confirmed by its 3-year average standard deviation of 13.1% (as of Nov. 30), which is higher than both the index and peer group. Still, the fund has done a solid job protecting capital in falling markets, participating in roughly three quarters of the market declines.

While not for everyone, the fund can be an interesting addition to a portfolio for those with an above-average risk tolerance, an appetite for growth, and a long-term time horizon. I would definitely not consider this a core holding, but rather a piece of an otherwise well-diversified portfolio.

Dave Paterson, CFA, is the Director of Research, Investment Funds for D.A. Paterson & Associates Inc., a consulting firm specializing in providing research and due diligence on a variety of investment products. He is also the publisher of Dave Paterson’s Top Funds Report, offering regular commentary and in-depth analysis of Canada’s top investment funds. He uses a unique analytical approach to identify funds with strong, risk-adjusted returns, and regularly publishes his insights and analyses in Fund Library.

Notes and Disclaimer

© 2018 by Fund Library. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited.

Commissions, trailing commissions, management fees and expenses all may be associated with fund investments. Please read the simplified prospectus before investing. Mutual funds are not guaranteed and are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Fund values change frequently and past performance may not be repeated. No guarantee of performance is made or implied. This article is for information purposes only and is not intended as personalized investment advice.


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