FA Magazine March 2023 | Page 51

than the index . “ You ’ re paying up a bit for quality ,” he says .
Also , he says that in many cases he looks at earnings on a three- to fiveyear cross-cycle basis , which means the earnings estimate he has might be different than what ’ s found on third-party market data sites . “ My sweet spot for investing is multi-year structural growth stories , high-barriers-to-entry businesses , and attractive valuations based on my earnings forecast ,” he explains . “ One of the ways I check that is pricing power in real terms at every point in the cycle .”
Currently , he points out , there ’ s a big focus on whether companies can pass through cost inflation to their customers . The companies he looks for can maintain their pricing power in real terms in any economic environment .
“ I tend to run relatively concentrated funds because I look for multi-year structural growth stories and high-barriers-to-entry businesses , and those don ’ t tend to change that often . That leads to low turnover at 20 % to 25 % over time .”
And low turnover typically means lower tax exposure for investors .
Manager Jed Weiss Age 47
Portfolio Construction Weiss has specific investment criteria that winnows down his investable universe , and that helps inform the Fidelity analysts he works with so they know exactly what he ’ s looking for . “ I want to make sure that names coming my way fit into my process ,” he states .
He explains that in some cases an analyst will pitch him an idea and they ’ ll work through what the company ’ s earnings power is and the valuation associated with that . In other cases , it ’ s
a name that he comes up with either through conversation with a company or through a screen or a document he ’ s read . Then he ’ ll call the analyst covering that sector and global region , and they ’ ll contact the company together . Weiss says he travels roughly 15 % of the time for work , and he ’ s often joined by Fidelity analysts from relevant offices when they visit overseas companies .
“ I ’ m blessed that Fidelity has a fabulous research staff around the world where we ’ ve had on-the-ground presence in a lot of these countries for de-
Professional Background He is a portfolio manager in the equity division at Fidelity Investments . Besides the Fidelity Advisor International Growth Fund , he also manages the Fidelity Series International Growth , Fidelity Series International Small Cap , Fidelity International Small Cap Opportunities , Fidelity Advisor International Small Cap Opportunities , and Fidelity International Growth funds . He also co-manages the Fidelity Total International Equity and Fidelity Advisor Total International Equity funds . He joined Fidelity in 1997 .
Outside Interests International travel to off-the-beaten track locales from Mali and Ethiopia to northern Ontario ’ s Polar Bear Provincial Park and central Turkey . He ’ s also a mountain biking enthusiast . cades ,” Weiss says . “ And that ’ s a real leg up regarding both corporate and governmental relationships . If you ’ re investing in companies in a regulated industry , it helps to meet the proper regulatory authorities in that country . And it ’ s helpful to have the Fidelity name behind you when companies are weighing whether to spend the time with investors .”
“ My sweet spot for investing is multi-year structural growth stories , high-barriers-to-entry businesses , and attractive valuations based on my earnings forecast .”
— Jed Weiss
He adds that having a huge research department around the world boosts the investment opportunity set . “ The more folks you have turning over stones , the more likely it is you ’ ll find gems ,” Weiss says .
But sometimes gems can get tarnished , like in 2022 when nearly all financial assets hit the rocks . And perhaps no asset class was hit harder than growth-oriented equities . The Fidelity Advisor International Growth Fund recorded a 23.21 % loss last year . While that bested the fund ’ s category average by a little more than 200 basis points , it trailed the fund ’ s bogey , the MSCI EAFE Growth Index , by 52 basis points .
“ Portfolio construction is a very important part of my process , and I think in years like last year with tremendous
Portfolio Statistics
Number Of Positions 77 Average Mkt . Cap
54.73 billion P / E Ratio 20.49x Std . Dev Fund / Benchmark 21.58 / 19.39 Turnover Ratio 22 % Net Expense Ratio 1.02 %
Portfolio stats as of 12 / 31 / 22 . Standard deviation ( three-year period ) versus the MSCI ACWI ex USA Index as of 1 / 31 / 23 . Fund turnover stat as of 10 / 31 / 22 . Sources : Fidelity Investments and Morningstar .