If you listen very carefully, you may hear sleigh bells a-ringing, and given the rather frigid weather we are having in the UK at the moment, you may soon see snow a-glistening and your nose get a-chilling. And if you have been really good this year, Father Christmas might bring you investment return in excess of 11.5% which is what the Fidelity Nordic (Y-Acc-SEK) Fund has returned on a three-year annualised basis.
Just as Rudolph drags his sledge across the Northern Lights looking for good children, Bernard Puiffe and his team are scanning the equity markets of Finland, Norway, Denmark and Sweden looking for good small-to-mid cap opportunities that will outperform the FTSE Nordic 30 Index (SEK). Over the same three-year period, the benchmark return was 10.14%. The fund has a mix of investments – small, medium and large – and a minimum 50% of the fund is invested in sustainable investments.
Nordic exchanges hit by Russian aggression
Like most equity markets, the Nordic exchanges have taken a hit this year – especially given their proximity to a belligerent Russia, currently engaged in a war with Ukraine on its southern flank. Finland has an 830-mile border with Russia. Between end-September 2021 and end-September 2022 the benchmark returned -27.2%, but Fidelity Nordic returned -4.6% on an annual basis.
According to research from Hargreaves Lansdown, which offers the fund on its platform, the fund has an Industrials bias, with 23.8% of the fund invested in this segment. The fund also has notable exposures to Financial Services (18.4%) Basic Materials (13.8%), and Energy (13.8%).
Puiffe has been with Fidelity since 2006 and was appointed to the Nordic fund in 2011. He has a contrarian approach to stock-picking and uses a highly disciplined investment process based on systematic scoring of companies on qualitative and quantitative factors. He has an unconstrained approach and rates stocks based on five criteria: Fundamentals, Momentum, Valuation, Catalyst and Risk Factor. In addition, sustainability is fully integrated to the value-focused and fundamentals-driven investment process.
Sustainable investing for exposure to Nordic stocks
Launched in October 1990, the fund aims to provide long-term capital growth with the level of income expected to be low. It will invest at least 70% in the shares of companies quoted on the Nordic exchanges. Sustainability and corporate responsibility is a big deal for the fund and it adheres to the firm-wide exclusion list (which includes cluster munitions and anti-personnel landmines) and also excludes issuers which fail to conduct their business in accordance with accepted international norms. That said, the fund has the freedom to invest outside its principal geographies, market sectors, industries or asset classes and according to Hargreaves Lansdown had a 5.8% exposure to the UK. Income earned by the fund is accumulated in the share price.
- Clean Invest Africa: Turning waste into energy
- Bluefield Solar Income: Making hay while the sun shines
- Greencoat Renewables focusing on big tech clean energy
As at the end of October, the fund held 48 positions and had assets under management of SEK4bn (GBP320m). The find is a Luxembourg-domiciled SICAV. The fund has an ongoing charge of 1.07% of which 0.8% is an annual management charge and has no performance fee.
The fund’s top-five holdings at the end of October were :
- TORM [CPH:TRMD-A / NASDAQ:TRMD] 5.8%
- Telefonaktiebolaget L M Ericsson [NASDAQ STOCKHOLM:ERIC B] 5.2%
- Sampo Oyj [HEL:SAMPO] 5.1%
- Stolt-Nielsen Ltd [OSL:SNI] 4.6%
- Subsea 7 SA [OSL:SUBC] 3.9%
