Fidelity Equity - Recommend for consistency and better downside protection

Lahar Bhasin finds Fidelity Equity suitable as a core holding and expects the fund to deliver above average returns with consistency

With a mandate to invest across large, mid and small caps, value and growth stocks, the fund epitomises the true nature of a diversified equity fund with no style bias. For an investor with no marked preferences in style or market cap size, this fund would fit the bill. The only downside is that with no specifications of your own, you are leaving all the decisions to the fund manager. What is also noteworthy is that the fund leaves the asset allocation decision to the investor rather than the fund manager. You will not find the fund manager sitting on large piles of cash in case of a market downturn. Inspite of this the downside risk is contained.

The current fund manager has been at the helm for close to five years now, and over this period, Sandeep Kothari has built a robust reputation for his style of fund management. Sandeep manages to stay ahead of developments and the strategy adopted is that of systematic profit booking. He also manages to keep the expense ratio of the fund in check.

Expectation Management

The return expectation from this fund can be above average. However, there have been only few instances of spectacular performances. Apart from consistency in returns, investors can expect relatively better downside protection. The performance in 2008 was a big relief for investors, and so far this year as well the fund has managed to contain losses relative to its benchmark and the average peer. The performance over the past year and three years relative to the benchmark is commendable. The fund has managed to post a steady 23 per cent compounded annualized return, since its inception, which is impressive.