Select 50 - our experts' favourite funds

Firstly, an initial list is created based on a range of investment criteria. Our analysts narrow down more than 3,000 funds, screening them on performance, consistency and a range of other metrics - they don’t just want to know which funds have performed well, they want to know why. 

This part of the process is combined with insights from hundreds of hours of face-to-face meetings. These meetings give our expert analysts the chance to question fund managers and their teams, to ensure the process and philosophy remains on the right track.  
 

The initial investment selection produces a shortlist of  names which are then considered as part of a second customer benefit analysis, where they are whittled down to around 50. 

To make the final 50, funds are assessed on a number of measures including their price versus similar funds and any discount they are prepared to offer our customers.

In this way, we can use our size and scale to drive down costs - but only on funds that have already been selected for their investing pedigree.

Changes to the Select 50 can occur for a variety of reasons. Our expert fund selectors may have changed their view of a fund. Alternatively, its benefits to customers (discounts etc) may have become more or less attractive relative to the other funds in its category. You should not necessarily view removal from the Select 50 as a reason to sell.

The Select 50 is updated twice a year in January and July, though funds may be removed at any point during the year.

Newly added funds

Following the January 2022 review, the below funds were added to the Select 50:

• iShares UK Gilts All Stocks Index
• J O Hambro Capital Management UK Dynamic
• J O Hambro Capital Management UK Equity Income
• JPM Asia Growth
• Fidelity Funds - Sustainable Asia Equity
• Majedie Asset Management US Equity

Removed funds

Following an analyst downgrade, the following fund was removed from the Select 50.

• Fidelity Funds - Asian Special Situations

Following our Internal Customer Benefit Anlaysis, the following fund was removed from the Select 50 but remains highly-rated by our fund analysts:

• Jupiter UK Special Situations

The Select 50 uses a two-stage selection process managed by our investment director Tom Stevenson.

The actual analysis of candidate funds is done by Fidelity’s team of multi-asset experts. This team assesses all the funds we offer on Fidelity.co.uk, regardless of whether it is a Fidelity fund or from another provider. It’s made up of investment specialists with diverse industry experience in manager selection and asset management, who try to identify fund managers whose success has been based on investment skill, rather than luck.

The team believes there is no one simple way of verifying the presence of such skill and so the manager selection process draws on a multitude of qualitative and quantitative techniques which, when combined, give an informed view. A rigorous process identifies evidence of key manager skills and verification of a fund manager’s stated investment style and process.

Our team of multi-asset experts will usually start the selection process by running quantitative screens of funds. They take fund and manager performance from various databases, including Bloomberg, and directly from the fund managers themselves. From here, appropriate peer groups are pulled together within each region to enable comparison of strategies.

To identify the most consistent managers, these peer groups also look at measures including performance over different time periods and market conditions, relative performance and consistency of ranking against peers, plus a range of statistical measures.

Fidelity’s team of multi-asset experts views the track record (identified by the quantitative analysis) of a fund as validation of the fund’s organisation and investment processes, but not necessarily a leading indicator. In other words, the team doesn’t view a fund as being suitable for the Select 50 just because it’s got good numbers - we’re always telling our customers that past performance is not a reliable indicator of future performance, and so we could hardly rely on this alone for including a fund in the Select 50.

So, our experts conduct due diligence by meeting with the fund manager and other important people involved in the investment process.

They look at the organisation and ask questions like: are the interests of its employees aligned with those of investors?

They look at the investment philosophies and processes and ask questions like: is there a consistent process? Importantly, our experts draw on their experience of researching and meeting with managers to help identify what makes a robust and successful process.

And they examine the track record, asking themselves whether the data is consistent with the fund manager’s description of their process - particularly in terms of risk diversification.

The number of such meetings can vary, depending on what's required for our experts to feel comfortable, so they can recommend the manager. The due diligence process can end at any point if they become concerned about any of the factors they are considering.

The Select 50 list includes both Fidelity and other funds. While our team of experts may be more familiar with Fidelity funds, their approach to researching these funds is the same as for external funds. When they research management teams, processes, performance, style characteristics, risk management and all other relevant aspects, they apply the same level of scrutiny to Fidelity and to non-Fidelity funds. Importantly, any funds selected are chosen on investment merit only, not on any commercial advantage to Fidelity.

We separate the investment process from the negotiation of discounts, and the investment selection always precedes the discount element. In other words, you cannot buy your way onto the list. If the fund is not attractive from an investment point of view, then it will never get to the discount part of the process. There are clear controls in place to ensure that the investment team making the selection decisions is unaware of any commercial discussions about discounts.