- Only 8 funds from the total 47 Fidelity Select 50 list consistently outperformed their peers over the past 1, 3, and 5 years.
- The biggest fund, with £12.2 billion in assets, iShares Physical Gold ETC GBP, has been ranked as one of the top-performing funds with impressive returns over the past 1 & 3 years.
- 57.5% of Fidelity Select 50 funds have a history of underperformance, with 27 funds receiving a poor one or two-star rating.
- The Baillie Gifford Japanese B Acc fund has consistently ranked as one of the worst performers in the IA Japan sector over the last 1, 3, and 5 years.
Navigating the vast array of investment funds can be challenging for both investors and advisers. To simplify this process, major UK fund supermarkets offer curated lists of their top fund picks. One such list is the Fidelity Select 50, which features 47 funds that Fidelity believes are among the market's best performers. This list competes with similar offerings like the Hargreaves Lansdown Wealth 50.
Our recent analysis of the Hargreaves Lansdown Wealth 50 revealed that a significant number of its featured funds have underperformed over time. To determine if the Fidelity Select 50 offers better options, we've conducted a comprehensive review of all 47 funds on their list.
This article presents our findings, focusing on each fund's performance and sector rankings over the past 1, 3, and 5 years. We highlight both the standout performers that have consistently outpaced their peers, as well as those that have struggled to meet expectations. This information aims to provide investors with valuable insights to make more informed investment decisions.
About The Fidelity Select 50
In 2016, Fidelity launched the Select 50, which is a list of funds that they believe represent some of the best funds on the market. The Select 50 is aimed to compete with the established fund lists from Hargreaves Lansdown and Bestinvest.
Fidelity claims that only the highest-quality funds make it onto the Select 50. The funds are chosen based on their investment merits by a team of nine analysts from Fidelity’s multi-asset Investment Solutions group. These analysts evaluate various factors, including fund performance over different periods, comparative performance, and consistency of rankings against peers.
Fidelity Select 50 Performance Summary
The Fidelity Select 50 list comprises a total of 47 funds, featuring a mixture of both active and passive funds. To provide clarity on the funds listed within the Select 50, we reviewed the performance and sector rankings of all 47 funds over the past 1, 3, and 5 years, assigning each fund an overall performance rating between 1 and 5 stars. This analysis offers a clear view of how each fund has performed relative to its peers within its respective sector.
According to our analysis, the Fidelity Select 50 funds' performance shows that only 8 out of the 47 funds received an impressive four or five-star rating, indicating strong performance.
However, more than half of the funds in the Select 50 list have a history of underperformance, with 7 funds receiving a one-star rating and 20 funds receiving a two-star rating. Therefore 57.5% of the funds have struggled relative to their peers.
Best Performing Fidelity Select 50 Funds
While the Fidelity Select 50 list is considered a valuable resource for investors, offering a carefully selected range of high-conviction funds, there is notable variation in fund performance. Despite many funds in the list underperforming, a total of 8 funds have consistently excelled within their sectors.
Below we identify the 4 five star rated funds from the Fidelity Select 50 list.
Fidelity Special Situations
The Fidelity Special Situations, with approximately £3.11 billion under its management, is designed to increase the value of an investor's investment over 5 years or more. It allocates at least 70% of its assets to equities and equity-related securities of companies that are either domiciled, incorporated, or conduct significant business within the UK, and are also listed on UK exchanges.
The fund’s strategy has resulted in exceptional performance, consistently outperforming its peers and ranking among the top performers in the IA UK All Companies sector. Over the past 1, 3 & 5 years, the fund has delivered impressive returns of 19.77%, 29.30%, and 38.86%, respectively. In comparison, the sector averages for these periods were 14.22%, 11.16%, and 25.39%.
The substantial growth achieved by the Fidelity Special Situations Fund, particularly when compared to its sector peers, highlights its effectiveness in identifying and capitalising on opportunities within the UK equity market. The fund’s strong track record suggests that it has successfully navigated various market conditions, making it a compelling choice for investors seeking exposure to UK equities with a focus on capital growth.
iShares Physical Gold ETC GBP
The iShares Physical Gold ETC GBP is a passively managed exchange-traded commodity (ETC) that aims to provide investors with direct exposure to the price of gold. This ETC is physically backed by gold bullion, with the value secured by gold bars stored with the custodian, JPMorgan.
Compared to the broader market, the iShares Physical Gold ETC GBP stands out, particularly when traditional equity markets have experienced turbulence. Gold's appeal as a safe-haven asset often increases during periods of economic uncertainty, which is reflected in the ETC's strong returns relative to many equity-based investments.
The iShares Physical Gold ETC GBP fund has consistently ranked among the top performers in its sector, receiving a top performing 5 star rating. Over the past year, it delivered robust growth of 21.85%, outperforming the sector average of 2.96%. Its three-year performance was equally impressive, with a return of 42.01% compared to the sector average of 26.44%. Over the past 5 years, the fund generated a solid 60.10% return, significantly exceeding the sector average of 45.83%.
Lazard Emerging Markets
The Lazard Emerging Markets fund targets capital growth over a minimum five-year period with a focus on emerging markets. The fund allocates at least 70% of its assets to equities and equity-related securities in emerging market regions where it currently manages approximately £835.84 million of investor assets. Over the past 1, 3 & 5 years the fund has consistently demonstrated strong performance within the IA Global Emerging Markets sector.
The fund's track record is impressive. Over the past year it achieved growth of 14.19%, significantly surpassing the sector average of 6.07%. Its three-year performance of 19.72% was exceptional compared to the sector's negative average of -5.19%. Over 5 years the fund generated returns of 41.11%, considerably exceeding the sector average of 28.67%.
The fund's investment strategy emphasises sectors with significant growth potential, such as financial services, technology, and consumer cyclicals. It maintains significant exposure to Asian, Latin American, European, and African markets. By targeting both undervalued opportunities and growth stocks, the fund offers a balanced yet dynamic approach to investing in Global Emerging Markets, making it an attractive option for investors seeking exposure to these high-potential regions.
L&G Global Equity Index
The L&G Global Equity Index fund is designed to provide investors with income and growth by closely tracking the performance of the FTSE World Index. The primary objective of the fund is to replicate the performance of this Index on a net total return basis before fees and expenses are deducted. This index comprises shares of large and mid-cap companies across various geographical areas, providing broad global exposure. To achieve its objective, the fund employs a replicating strategy, ensuring that at least 90% of its assets are invested in the constituents of the FTSE World Index in proportions that mirror the index.
Over the past year, the L&G Global Equity Index fund delivered a return of 17.56%, surpassing the sector average of 11.54%. Over three years, it grew by 27.78%, outperforming the sector average of 13.18%. Its 5-year growth of 63.49% also exceeded the sector average of 47%, placing it among the top performers in the IA Global sector.
With a low ongoing charge of just 0.13% and its robust performance history, this fund is an attractive choice for investors seeking a cost-effective and reliable way to gain exposure to global equities.
Worst Performing Fidelity Select 50 Funds
As highlighted in our performance analysis, 27 of the funds within the Fidelity Select 50 list have underperformed relative to their peers, earning either a one-star or two-star rating.
Below, we highlight the 4 worst-performing funds, each demonstrating consistent struggles over the 1, 3, and 5-year periods.
Vanguard Global Small-Cap Index
The Vanguard Global Small-Cap Index Acc GBP fund manages assets of £3.58 billion and has recently underperformed relative to its peers in the IA Global sector. This passively managed fund aims to achieve long-term capital growth by tracking the performance of the MSCI World Small Cap Index. The fund’s focus on small-cap companies offers investors exposure to a broad range of industries across different regions, including the United States, Japan, Europe, and more.
Despite the broad diversification the fund has struggled to deliver competitive returns over certain time frames. Over the past year, it returned a growth of 11.15%, which is slightly below the sector average of 11.54%. The 3 & 5-year performances were also poor, with returns of only 10.64% and 39.64%, respectively, both of which are significantly below the sector averages of 13.18% and 47%.
The poor performance of this fund is due to the inherent volatility of small-cap stocks, a concentrated regional focus, and the limitations imposed by its passive management strategy, which restrict its ability to adapt to changing market conditions.
Baillie Gifford Japanese
The Baillie Gifford Japanese B Acc fund aims to outperform the TOPIX (Tokyo Stock Price Index) as stated in sterling, by at least 1.5% per annum over rolling five-year periods, after deducting costs. This sub-fund is actively managed, and invests at least 90% of its assets in shares of Japanese companies of any size and sector, with a focus on identifying growth opportunities.
This £1.48 billion, Baillie Gifford Japanese B Acc fund has managed to return only 4.89% growth over the past year and is ranked among the worst in the IA Japan sector. It hasn’t just been the past 12 months that have been difficult for this fund. Over the recent 3 years, this fund further posted a loss of -7.55%, which was again the worst in its entire sector. The 5-year performance was also poor, with a return of 11.05%, well below the sector average of 26.36%.
The fund's poor performance is due to several factors, including heavy concentration in volatile sectors like communication and financial services, which have seen significant fluctuations. Additionally, the broader challenges within the Japanese market, such as slow economic growth and adverse demographic trends, have further hindered the fund's ability to deliver strong returns.
Brown Advisory US Smaller Companies
The Brown Advisory US Smaller Companies B Acc USD fund is focused on achieving capital growth by investing at least 80% of its assets in US equities. It primarily targets small-sized companies listed on US markets and exchanges, with market values typically up to USD 6 billion at the time of investment.
The fund’s investment strategy also allows for diversification into other financial instruments such as US Rule 144A Securities, American Depositary Receipts, U.S. treasury bills, and both fixed and floating rate US government securities, as well as other ancillary liquid assets.
Despite its growth strategy, the fund has faced challenges and consistently underperformed relative to its peers in the IA North American Smaller Companies sector. Over the recent 3-year period, this 1-star rated fund has returned losses of -0.64%, which was one of the worst in its sector. Over the last 5 years, it delivered growth of 27.95%, again below the sector average of 52.79%.
iShares Core MSCI Japan IMI UCITS ETF GBP
Despite being the largest fund with £5.85 billion of investors' assets, the iShares Core MSCI Japan IMI UCITS ETF GBP has consistently underperformed in the IA Japan sector.
The fund aims to achieve returns through a combination of capital growth and income that reflects the performance of the MSCI Japan Investable Market Index (IMI). It provides diversified exposure to Japanese equities across large, mid, and small-cap segments at a low cost, with a total expense ratio (TER) of 0.12%.
The fund's performance has been somewhat mixed. Over the past year, the ETF delivered a return of 10.08%, which is a solid performance and slightly better than the sector average of 8.54%. Over the last 3 & 5 years, the fund posted returns of 13.19% and 28.07%, which were slightly better than the sector averages of 8.54% and 26.36%.
While it has delivered positive returns, this passive fund has not performed strongly enough to stand out, particularly in the competitive Japanese market, making it a less attractive option within its sector. The performance has been hampered by Japan's economic challenges and its exposure to volatile sectors such as industrials, contributing to its ranking among the worst-performing funds.
Summary
The Fidelity Select 50 list has become one of the most popular sources of guidance for many investors seeking to identify suitable investment ideas. However, our analysis identified that 57.5% of the funds within this popular and influential list have underperformed, with only 17% consistently delivering top performance.
These findings suggest that, although Fidelity's Select 50 list includes some standout performers, the overall selection is underwhelming. As a result, investors and advisers should be cautious when relying solely on recommended fund lists such as the Select 50 for identifying suitable fund choices.
Download the latest Best Funds Report, which identifies all 4 & 5 star funds from an analysis of over 3,000 funds.
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