Fidelity is increasing its focus on sector analysts as it sees the increasing globalisation of stock...
Fidelity is increasing its focus on sector analysts as it sees the increasing globalisation of stocks leaning away from country specific stockpicking.
Simon Fraser, chief investment officer at Fidelity, said: "Our resources in terms of fund managers and traders has also increased. At the beginning of 1996 we had 13 fund managers in our London team, now we have 18. A few years ago we moved our coverage to a pan-European approach, more recently we have moved our coverage in line with changing market weights."
The group has moved from having only two analysts covering technology and telecoms five years ago to having three telecoms and seven technology analysts based in London. The group also has dedicated internet and IPO analysts.
Changing valuation techniques due to the increase of internet companies, which can not be valued on traditional terms such as earnings growth, have also been adopted.
Fraser said: "In this increasingly globalised environment, industry specific knowledge is becoming more valuable than country specific knowledge when valuing and analysing companies. When visiting companies we are spending an increasing amount of time with different divisions such as R&D, distribution or a foreign subsidiary. We are also visiting customers, suppliers, regulators and investment bankers to gain further insight into the companies we are investing in."
Technology is having its impact on the way the fund management teams communicate and deal.
Information is delivered electronically and portfolios are monitored in real time so the managers can screen for internal and external news flows.
More than 60% of Fidelity's portfolio managers now electronically transmit their orders to the trading desk, Fraser said.
He added: "We need to make sure our research is co-ordinated with the efforts in Asia and the US in order to leverage our analysts' global expertise and approach."