How the Fidelity Advisor Overseas Fund Has Performed

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Mar. 11 2016, Updated 8:07 a.m. ET

Fidelity Advisor Overseas Fund’s performance

In this article, we’ll specifically outline the performance of the Fidelity Advisor Overseas Fund – Class A (FAOAX), which is one of the classes available for retail investors. The fund is invested in stocks like Hitachi (HTHIY), Barclays (BCS), Credit Suisse Group (CS), Honda Motor (HMC), and Rolls Royce Holdings (RYCEY), among others.

From a purely NAV (net asset value) return standpoint, the FAOAX emerged as an excellent performer for both the one-year period until February 29, 2016, as well as in 2015 among the peers chosen for this series. For return comparison, we have chosen two ETFs: the iShares MSCI ACWI ex U.S. ETF (ACWX) and the Vanguard FTSE All-World ex-US ETF (VEU). For evaluating benchmark-related metrics, we’ve chosen ACWX as the benchmark for all funds in this review, as it tracks the MSCI All Country World ex-U.S. Index.

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Other metrics

The FAOAX’s standard deviation, or the volatility of returns, in the one-year period until February 29 was 15.1%. This is lower than both the ACWX’s 15.4% and the peer group’s average of 15.7%.

The fund’s risk-adjusted returns, calculated via the Sharpe Ratio, were negative for the one-year period ended February 29. Evaluating a negative Sharpe Ratio may be misleading, so we’ll avoid that. The ratio had stood at 0.44 for 2015, placing it second among its peers.

The information ratio, calculated with ACWX as the benchmark, was 1.8 for the one-year period ended February 29, placing it second among its peers. The information ratio shows the consistency of fund managers along with measuring their ability to generate excess returns over a benchmark. The higher the reading, the better the consistency. For 2015, the fund’s information ratio made it the top ranked fund among its peers.

A note to investors

The FAOAX was not just consistent with its returns, it was also a substantial alpha generator. For both the one-year period ended February 29 and for 2015, the fund’s alpha placed it among the top three funds in the present peer group. These quantitative metrics make the FAOAX an attractive offering. However, its alpha has taken a hit in YTD 2016. Thus, investors should consider its longer-term performance to see whether its superior performance was just a one-off.

In the next article, we’ll look at the Franklin International Growth Fund – Class A (FNGAX).

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