Fidelity has shifted to an underweight position in technology stocks in its US Oeic and moved to ove...
Fidelity has shifted to an underweight position in technology stocks in its US Oeic and moved to overweight cyclical companies.
Fidelity American, which is managed by John Muresianu, has cut back its overweight exposure to technology, which dragged on the fund's short term performance after the correction in the sector in March and April.
The fund is last out of 88 funds in the North American sector over three months, bid to bid, and is 76 out of 88 over one year on an offer to bid basis. Back in June 1999 the fund was ranked one out of 91 over one year, on returns of 91.5%.
Muresianu has now reduced exposure to stocks including Cisco, Microsoft and Nortel Networks, which were among his top 10 holdings three to four months ago.
He has shifted towards cyclical areas of the market including transport and energy on the back of what he sees as selected attractive valuation opportunities.
Cyclical areas of the market have been downgraded amid expectations of a slowdown in the US economy but Muresianu believes selected stocks in this area of the market are being undervalued.
Exxon Mobil is now among the top 10 stocks in the portfolio with a weighting of 3.4%, as is oil services firm Schlumberger, with a weighting of 2%. Muresianu is also keen on gold and precious metal mining stocks where he feels negative sentiment offers attractive buying opportunities.
Barrick Gold is the largest individual holding in Fidelity American as at 30 June with a 4.2% weighting and the second largest holding in the fund is Newmont Mining, which makes up 3.5% of the portfolio.
Other stocks in the top 10 include Chubb, with a weighting of 1.8%, construction machines company Caterpillar on a weighting of 1.4% and Burlington Resources which makes up 2.8% of the portfolio.
John Ross, portfolio strategist at Fidelity said: "The short-term underperformance of Fidelity American came in March and April when technology related stocks fell quite sharply and that impacted on the fund. John Muresianu shifted into the cyclical areas of the market and was also not able to take advantage of the rebound in technology stocks.
"Some of the cyclical stocks the fund has invested in have not yet performed as well as the overall market."
The fund is also underweight financials on the back of increasing problems for the US banking sector which is seeing an increase in the amount of bad debt.
Fidelity American has a 27.5% exposure to services, 12.3% in gold mines, 16.4% in consumer goods and 15.8% in capital equipment as at 30 June.
Fidelity American currently holds around 300 stocks and Muresianu is running the fund with an active trading style, with a portfolio turnover in excess of 100% a year.
Other sector weightings for the fund include 11.3% in energy, 6% in financial services, 4.5% in materials, 0.6% in multi-industrial holding companies and 5.5% in cash.
'Increasing range of platforms'
Who pays for platforms?
Investments hit by turbulence
Range launched in March 2017
Regulated v unregulated