Fidelity starts new Global Equity Income fund
Fidelity Investments said it’s launching a new Global Equity Income fund, in an effort to provide investors a portfolio of larger, less-volatile stocks that also pay dividends.
The fund’s manager, Ramona Persaud, said the Boston mutual fund giant’s clients who are nearing retirement age are looking for investments that fluctuate less dramatically during turbulent economic periods.
“They’ve really gone through a rough patch over the last two decades,’’ Persaud said. “Our investor base is really sensitive to volatility.”
Buying large stocks that pay dividends is, in many ways, a return to a more traditional type of investing. Fidelity veteran Bruce Johnstone leads the firm’s equity-income team, which currently has $32 billion under management in 10 funds. The global fund will open the way to investing in more companies outside the United States that pay dividends, Persaud said. And while dividends have been lean at US companies for some time, they are improving as the economy gains speed, and as established technology players with large earnings start to pay dividends.
Persaud said equity-income funds tend to produce steadier returns over time than other stock funds, and that Fidelity is positioning them as an alternative at a time when bond fund yields are low.
Fidelity’s current Equity-Income Fund is up 6.5 percent this year, but has underperformed its benchmark over the past decade. The fund fell nearly 4 percent in the 12 months through April, compared with. a 0.6 percent gain in the Russell 3000 Value index. Over three years, it was up 16.8 percent annually, compared with 18.4 percent for the Russell benchmark.Beth Healy can be reached at email@example.com.