Should you consider Michael Clark and the Fidelity MoneyBuilder Dividend fund?
We continue to suggest that UK exposure forms the core when building an equity portfolio, and this is a strategy that has served investors well in recent years. Even with the market dipping slightly in price terms in 2014, when you factor in dividends it still delivered positive returns – in fact, 2014 was the eighth year in the last ten that it has done so.
Michael Clark has produced good returns to investors since taking over the Fidelity MoneyBuilder Dividend fund. Clark has a more conservative investment style than most fund managers in the UK equity income sector – he goes for companies with understandable business models, strong balance sheets and predictable cashflows, and those he believes will be able to deliver sustainable dividends. These are mostly mid or large-size UK companies but you’ll come across a handful of overseas companies too, because Clark takes advantage of the flexibility his mandate gives him to invest up to 20% of the fund in businesses listed outside the UK.
Our senior research analyst, Tom White, explains: “Clark’s style means he tends to favour certain industries. Healthcare is a good example and, like Woodford, he currently holds GlaxoSmithKline and AstraZeneca, as well as Swiss rivals Novartis and Roche. Other examples are utilities (companies such as National Grid and Centrica) and consumer goods (drinks maker Diageo and sugar giant Tate & Lyle feature in the fund). He has also been avoiding typically riskier names in the banking and mining sectors. This investment style typically leads the fund to provide low volatility returns and a degree of protection from falling markets and, while he can lag in rising markets, over his career Michael Clark has provided benchmark-beating performance.”
With many of the UK’s dividend-paying companies now found in more volatile industries such as mining and energy, the equity income sector may be riskier than it has been historically. We therefore believe the more cautious approach of Fidelity MoneyBuilder Dividend makes it a valuable option for investors who are in search of an income but concerned about their level of risk.
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The value of investments, and the income derived, can go down as well as up, and you can get back less than you originally invested. Funds may carry different levels of risk depending on the industry sector(s) in which they invest. You should ensure that you understand the nature of any fund before you invest in it. Prevailing tax rates and reliefs are dependent on your individual circumstances and are subject to change. This article does not constitute personal advice.