Equity market narratives are still being dominated by the technology and AI theme, and investors must be mindful of elevated macro and geopolitical risks. With market conditions shifting quickly, it is crucial for asset managers to identify and exploit alpha sources across all environments, not just when markets are rising. In this context, we outline three key merits of the new Fidelity Absolute Return Global Equity Fund.
The Fidelity Absolute Return Global Equity Fund is a market-neutral, long-short strategy, blending the highest conviction buy and sell ideas from Fidelity’s global analyst network with quantitative portfolio construction techniques. The fund aims to generate alpha while neutralising market beta, deriving returns from stock selection rather than broad market movements. Importantly, the fund has the potential to outperform across a range of market environments, reducing reliance on the direction of equity markets.
As the name suggests, absolute return equity market-neutral strategies seek to generate returns in absolute terms, rather than relative to equity indexes or benchmarks. Ours is no different. The fund’s dissimilar performance profile relative to traditional asset classes means it can act as a useful diversifier in broader portfolios with inherent correlation risk.
The benefits are clear: Chart 1 shows that allocating to well managed absolute return strategies within a broader portfolio can improve risk-adjusted returns over the long term. The Fidelity Absolute Return Global Equity Fund can therefore support portfolio resilience and contribute to favourable long-term performance outcomes.
Chart 1: Comparing risk/return metrics with/without allocations to absolute return strategies in broader portfolios (maximum 20% allocation)
Fidelity’s proprietary research is the beating heart of the capability, and the engine that ultimately drives performance outcomes. The Fidelity Absolute Return Global Equity Fund is arguably the purest play on our fundamental research insights, leveraging the highest conviction ideas on both the long and short side from our global analyst network – an alpha source that cannot easily be replicated in the industry.
The strategy holds long positions in our analysts’ most highly rated stocks, and short positions in the worst rated stocks that are expected to fall in value, or at least lag their regional market. Essentially, we are looking to capture the spread in return between winners and losers, regardless of prevailing market conditions.
Register now: Live webinar on 5 Nov – Introducing the Fidelity Absolute Return Global Equity Fund
Chart 2 shows that crucially, Fidelity’s research teams have consistently demonstrated genuine skill. The breadth and depth of our global research platform enable us to separate signal from noise and uncover nuances that others miss. These insights feed directly through to fund performance.
Chart 2: Fidelity global equity research performance
Considering the difficulty of recovering losses and the focus on delivering positive returns across the full market cycle, it is critical that absolute return strategies avoid sizeable drawdowns during periods of market volatility.
Pleasingly, our research engine and disciplined, repeatable portfolio construction methodology have combined as anticipated, working in harmony to achieve stated objectives. We have managed a SICAV version of the Absolute Return Global Equity strategy for six years: as shown in Chart 3, drawdowns have been much lower than broader global equities during that time. This has helped preserve capital and smooth the performance profile over time, as well as contributing to top-quartile performance[1] versus peers over three and five years.
Chart 3: Fidelity Absolute Return Global Equity strategy vs global equities – drawdown profile
The fund’s very low beta profile means it is expected to provide some ballast in broader portfolios during periods of market turmoil: this could be particularly valuable if risk appetite turns and equity markets start to weaken.
Discover the Fidelity Absolute Return Global Equity Fund
Register now: Live webinar on 5 Nov – Introducing the Fidelity Absolute Return Global Equity Fund
Important information
The value of investments can go down as well as up and you may not get back the amount invested. Past performance is not a guide to the future. The value of investments in overseas markets may be affected by changes in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. The Fund may make increased and more complicated use of derivatives, and this may result in leverage. In such situations performance may rise or fall more than it would have done otherwise. The fund may be exposed to the risk of financial loss if a counterparty used for derivative instruments subsequently defaults. The Fund does not offer any guarantee or protection with respect to return, capital preservation, stable net asset value or volatility. The scheme is authorised overseas but not in the UK. Complaints against funds or fund providers that are not based in the UK (non-UK domiciled) are not covered by the Financial Ombudsman Service (FOS). Claims against funds or fund providers that are not based in the UK (non-UK domiciled) are not covered by the Financial Services Compensation Scheme (FSCS). Further information may be found in the fund’s Key Information Document (KID), prospectus or other supporting documents.
Investments should be made on the basis of the current prospectus, which is available along with the Key Investor Information Document, current annual and semi-annual reports free of charge on request by calling 0800 368 1732. Fidelity only gives information on products and services and does not give investment advice to retail clients based on individual circumstances. Issued by FIL Pensions Management, authorised and regulated by the Financial Conduct Authority. Fidelity International, the Fidelity International logo and F symbol are trademarks of FIL Limited. GCT260907EUR
[1] To 30 June 2026. The peer group is the Morningstar EAA Fund Equity Market Neutral USD – quartiles are based on net of fees performance for the Y-PF-ACC-USD share class.
