Why FDIVX’s 2016 Has Been Below Average



Performance evaluation of the Fidelity Diversified International Fund

The Fidelity Diversified International Fund (FDIVX) has been a below average performer as of August’s end in 2016. The past year hasn’t been good to the fund either, though the past six months have been a bit better.

We’ve graphed FDIVX’s performance against the iShares MSCI ACWI ex U.S. ETF (ACWX) and the iShares MSCI EAFE ETF (EFA). Let’s look at what’s contributed to its below average performance so far in 2016.

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Contributions to returns

As you can see in the graph above, FDIVX has barely registered a rise so far in 2016. The financials sector has hurt the fund’s performance the most. Lloyds Banking Group (LYG) has driven this fall, with help from Mitsubishi UFJ Financial Group (MTU), Credit Suisse (CS), and UBS Group (UBS), among several others. However, the sector has had some positive contributions from stocks such as S&P Global (SPGI) and Itaú Unibanco Holding (ITUB).

Apart from financials, the healthcare and consumer discretionary sectors have hurt FDIVX. Novo Nordisk (NVO) and Teva Pharmaceutical (TEVA) have jointly led healthcare down. Meanwhile, Next has hurt the consumer discretionary sector, though Adidas (ADDYY) has combated some of its negative contributions.

The technology sector has helped to reverse most negative contributions to the fund, leading it into positive territory for the year. Taiwan Semiconductor Manufacturing (TSM) has powered the sector ahead, with help from Alibaba Group (BABA), Qualcomm (QCOM), and CGI Group (GIB), among several others.

Consumer staples stocks have been led by Henkel AG & Company and Alimentation Couche-Tard. The energy sector has been fueled by Tourmaline Oil and Schlumberger (SLB).

Investor takeaway

FDVIX has struggled in 2016. Though it hasn’t breached into negative territory, it hasn’t gained much either. Financials stocks, which have generally struggled in 2016, are the fund’s biggest holding. The fund’s widespread investment in stocks across the sector has driven its returns down. Positively contributing sectors have done just enough to keep the fund’s head above water.

Existing investors should carefully monitor the performance of the fund for the remainder of 2016.

Let’s move on to the JOHCM International Select Fund Class I Shares (JOHIX).


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