The Fidelity Diversified International Fund’s composition
The Fidelity Diversified International Fund (FDIVX) has been in existence since December 1991. At the end of January 2016, the fund was managing assets worth $20.7 billion and these were spread across 234 holdings as of the end of December 2015.
Financials formed 22.1% of the fund’s assets and made up the single largest sector of investment as of the end of December. The healthcare and consumer discretionary sectors followed, forming a combined one-third of the portfolio. The fund was not invested in the utilities sector. 56.2% of the fund’s assets were invested in European equities, followed by 15% in Japanese stocks.
Danish pharma company Novo Nordisk (NVO) is the fund’s largest holding, forming 2.1% of the fund’s December 2015 assets. Japan’s financial group ORIX (IX) is the highest holding from the country while Lloyds Banking Group (LYG) is the largest holding among stocks from the United Kingdom. Bayer (BAYZF) was the top holding from Germany, while France’s largest representation is by Sanofi (SNY).
Returns of the Fidelity Diversified International Fund
The Fidelity Diversified International Fund (FDIVX) was an average performer in January 2016, and slightly above average for 2015 and the one-year period ended January 2016. From a purely NAV (net asset value) return standpoint, among the nine funds in this review, the FDIVX stood at fifth for January and fourth for 2015 and the one-year period up until January
Standard deviation is used for assessing risks associated with an investment. Simply put, it measures the deviation of a series of returns from the average. A wide deviation reflects a high fluctuation in the returns, resulting in a higher risk, and vice versa.
For the one-year period ended January 2016, the standard deviation for the FDIVX stood at 14.1%. Meanwhile, the arithmetic average of the standard deviation of all funds in this review was 14.5%. Excluding the FDIVX, the average was 14.5%. Therefore, the returns of the fund were a little less volatile than the average return of the peer group.
For realized returns, the Sharpe ratio assesses the average return on a risk-free asset or security over total risk as represented by a standard deviation. The higher the Sharpe ratio, the better the risk-adjusted performance.
The Sharpe ratio for the FDIVX for the one-year period ended January 2016 stood at -0.22, whereas it was -0.39 for 2015. Both ratios are slightly above the average ratio of the peer group.
A note for investors
While the FDIVX was able to contain the volatility of its returns in January 2016, its risk-adjusted performance was below average for the month. 2015 had been much better for the fund. A takeaway from this is that during challenging times, the fund’s holdings may not be able to generate returns consistently. However, this must be substantiated over longer periods and other similar business cycles in order to confirm this as a trend. Investors could wait a bit more to see how the fund’s performance pans out before adding it to their shortlist. Let’s move to the next fund in this review: the Oppenheimer International Growth Fund – Class A (OIGAX).