The Upside: Fund feature – Unpacking Fidelity Canadian Large Cap Fund

 

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Subtitles are AI-Generated.

 

 

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Hello and welcome to the Upside Fund feature, I'm Helen Pang.

 

 

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I'm here today with Marianne Lando.

 

 

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Marianne is an investment analyst on the product research team here at

 

 

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Fidelity. She covers the Fidelity Canadian Large Cap Fund, which is managed by

 

 

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portfolio manager Dan Gepon, who has been covering the fund over the last 15

 

 

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years. Hi Marianne. Hi Helen, thanks for having me.

 

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Dan DuPont has 25 years of industry experience and also manages Fidelity

 

 

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Global Value Long Short Fund and the Fidelity North Star Fund.

 

 

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And he also co-manages Fidelity global Equity Plus Fund.

 

 

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Dan is a value investor. Marianne, can you please tell us what that means and

 

 

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walk us through his investment process?

 

 

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Dan's investment framework is anchored in capital preservation and downside

 

 

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protection through periods of market volatility.

 

 

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His disciplined focus on balance sheet strength and valuation may help

 

 

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limit losses in difficult markets, potentially leading to lower volatility

 

 

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and smaller drawdowns over time, an important advantage for supporting

 

 

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long-term compounding.

 

 

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And he achieves this by seeking durable businesses with strong balance sheets

 

 

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and assistant-free cash flow, which helps mitigate the impact of market

 

 

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weakness. And support overall portfolio stability.

 

 

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Value investing in this context means being infinitely patient on price until

 

 

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a clear disconnect between price and long-term earnings power.

 

 

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A thoughtful margin of safety shapes portfolio construction with decisions

 

 

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driven by business bottom-up fundamentals and valuation rather than

 

 

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macroeconomic and geopolitical forecast.

 

 

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Canadian Large Cap Fund was at 0% energy in

 

 

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January of 2020.

 

 

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And then nine months later, we were at 30% because oil

 

 

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went below zero, and these stocks discounted a really low oil price

 

 

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for a long time. So I go in those directions when the price

 

 

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becomes really easy for me to basically make a decision.

 

 

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And passwords today.

 

 

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You know oil and gas was sold sold sold and now we were at zero because

 

 

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they cannot predict whether the oil price will go a lot higher or a lot lower

 

 

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and it's true also for precious metals where we have some positions last

 

 

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year eventually they got so high that i had to sell them i

 

 

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don't really follow kind of free cash flow generation based on the current oil

 

 

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for a gold price i look more at you know where is the gold price

 

 

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relative history and then when it gets to a point where it It's a no-brainer

 

 

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on the downside. Then I will put a foot, I guess a toe in the

 

 

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water, maybe eventually a foot.

 

 

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But you look back over 25 years, and typically

 

 

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the gold price follows real rates, and it's disconnected

 

 

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from real rates over the past few years because central banks have been buyers.

 

 

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The Canadian Large Cap Fund specifically is managed with an aim to weather

 

 

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market volatility, with emphasis on capital preservation and downside

 

 

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protection. And recently, there can be a lot of fear and investor sentiment

 

 

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driven by headlines and ongoing developments in geopolitics.

 

 

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How does this fund address that?

 

 

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Dan sees one of the widest aspersions in technology evaluations we've witnessed

 

 

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in decades as markets price in a clear divide between AI winners and losers.

 

 

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He's selectively investing in deeply discounted, high-quality software

 

 

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businesses trading at attractive free cash flow yields while steering clear of

 

 

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more speculative names.

 

 

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Against this backdrop, the fund is positioned more defensively, emphasising

 

 

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stable, cash-generative businesses in overlooked areas such

 

 

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as consumer staples.

 

 

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In Dan's view, one key change to this cycle is that traditional inflation

 

 

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hedge commodities like oil and gold, which were once relied

 

 

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on for protection, are now more correlated with equities and harder to predict,

 

 

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limiting their effectiveness as diversifiers.

 

 

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And finally, liquidity also remains a priority, enabling the portfolio to

 

 

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remain defensive while retaining the flexibility to deploy capital quickly as

 

 

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valuations become more compelling.

 

 

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I'm trying to stay away from trouble, not trying to diversify per se.

 

 

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If in 2020, when what was really cheap was oil and gas, that's

 

 

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where we put a lot of our eggs because that's were the

 

 

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cheapest was, that where the least downside was.

 

 

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And so right now, the least down side where we've put more of our

 

 

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assets or more of our capital is in more defensive sectors, mostly staples.

 

 

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And it's just a result of the process bottom up, effectively.

 

 

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So I look at everything around the world, and I've been invested in tobacco

 

 

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for many years now, been invested it in spirits for a little

 

 

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less, little shorter amount of time, but still it's a

 

 

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decent size position there.

 

 

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And then South Forrest is gonna start to be a decent sized one.

 

 

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We saw the size of the sectors in my holdings in February without the

 

 

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holdings coming out. It's gone up quite substantially.

 

 

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So I think that's where you need to be to protect the downside.

 

 

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Let's look at the fund's performance.

 

 

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Since Dan DuPont took over portfolio management responsibilities of the

 

 

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Canadian Large Cap Fund, the strategy in Series F has not experienced

 

 

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a single negative calendar year.

 

 

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Can you walk us through some of the key moments and achievements over the last

 

 

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15 years?

 

 

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Canadian Large Cap Fund's track record reflects an investment approach designed

 

 

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to stand the test of time.

 

 

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Since Dan's tenure, the four-star, Morningstar-rated fund in the Series F

 

 

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has returned 11.8% outperforming its Canadian-focused equity

 

 

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category by 2.8%.

 

 

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More importantly, the fund has achieved this without a single negative calendar

 

 

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year as shown on the bar chart, highlighting a disciplined balance between

 

 

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downside protection and upside participation.

 

 

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These include a diverse range of market shocks, from the 2011

 

 

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US debt ceiling and Eurozone crisis correction to the 2015

 

 

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to 2016 China devaluation and oil collapse,

 

 

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the late 2018 equity sell-off, the COVID-19 market shock

 

 

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in 2020, the inflation-driven bear market of 2022,

 

 

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and the recent tariff-related volatility in 2025.

 

 

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Across these episodes, the fund has declined less than the broader market and

 

 

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in many cases recovered more quickly as conditions stabilised.

 

 

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That consistency has been recognised externally as well, with

 

 

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the fund earning nine fund-grade A-plus awards and twelve Lipper Awards,

 

 

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reinforcing the strength of a process rooted in valuation discipline, capital

 

 

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preservation, and selective risk-taking across market cycles.

 

 

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I want to thank them for the last 15 years for being patient through some

 

 

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orders in a few years where they might have thought, well, has he lost his

 

 

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mojo? But understanding now that it's all part of the process.

 

 

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And there's years like 2022 when people need me a little bit.

 

 

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And then there's the years where we need to be very patient.

 

 

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But the process is the same, hopefully for the next 15, 20 years.

 

 

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And we'll try to keep compounding at a high rate by protecting their art and

 

 

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money.

 

 

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Although this fund is called the Canadian Large Cap Fund, it does have the

 

 

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flexibility to invest internationally.

 

 

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Can you please tell us a bit more about that?

 

 

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With the flexibility to invest...

 

 

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Up to 49% outside of Canada, the Fund's global diversification has

 

 

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been an important contributor to returns.

 

 

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Targeted exposure to select international markets including Europe, Asia and

 

 

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emerging economies has allowed the portfolio to capitalise on more attractive

 

 

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valuations beyond Canada.

 

 

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Dan's disciplined bottom-up approach to identifying undervalued businesses in

 

 

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regions with supportive macro conditions has strengthened the Funds' ability to

 

 

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deliver strong risk-adjusted returns in an increasingly complex market

 

 

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environment. Building on his proven global valuation driven approach,

 

 

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we're pleased to introduce the Fidelity Global Concentrated Value Fund, also

 

 

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managed by portfolio manager Dan DuPont.

 

 

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The fund applies the same disciplined investment process investors know from

 

 

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Canadian large cap fund, but on a global stage, giving him the ability to cast

 

 

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a much wider net for high conviction ideas worldwide.

 

 

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For me, for large caps, there's less of them.

 

 

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We still have a 2% in China.

 

 

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We have a decent amount in Europe generally, maybe almost 20%.

 

 

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But it's not the most exciting environment to invest internationally,

 

 

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mostly from an absolute perspective.

 

 

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Maybe from a relative perspective, somebody that wants to decide whether they

 

 

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wanna invest in the US or globally or internationally,

 

 

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international is still somewhat cheaper.

 

 

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But for me, the whole software wobble has actually brought me back somewhat

 

 

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to the U.S. Because that's where the software companies are.

 

 

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There's really not a lot of good, large software

 

 

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companies outside the U S.

 

 

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That's all for today's show. Please follow us on our socials including

 

 

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knowledge, we can help you become a more informed investor.

 

 

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As always, working with a financial advisor is among the best investments you

 

 

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can make. Thanks for watching and I hope you'll join us again on the upside.

 

 

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Thanks for listening to, or watching, Fidelity Canada's The Upside podcast.

 

 

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Subscribe on your podcast platform of choice so you don't miss an episode.

 

 

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If you like what you're hearing please leave a review or a five-star rating.

 

 

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Fidelity mutual funds and ETFs are available by working with a financial

 

 

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advisor or through an online brokerage account.

 

 

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Visit fidelity.ca/howtobuy for more information.

 

 

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While on fidelity.ca you can also find more information on future live

 

 

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webcasts. Don't forget to follow Fidelity Canada on LinkedIn, YouTube,

 

 

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Instagram, or X. We'll wrap things up today with a quick disclaimer.

 

 

00:09:58,464 --> 00:10:01,767

The views and opinions expressed on this podcast are those of the participants

 

 

00:10:01,767 --> 00:10:06,105

and do not necessarily reflect those of Fidelity Investments Canada ULC or

 

 

00:10:06,105 --> 00:10:10,142

its affiliates. This podcast is for informational purposes only and should

 

 

00:10:10,142 --> 00:10:13,245

not be construed as investment, tax or legal advice.

 

 

00:10:13,245 --> 00:10:16,682

It is not an offer to sell or buy or an endorsement, recommendation or

 

 

00:10:16,682 --> 00:10:19,685

sponsorship of any entity or security cited.

 

 

00:10:19,685 --> 00:10:21,387

Read a fund's prospectus before investing.

 

 

00:10:21,387 --> 00:10:23,255

Funds are not guaranteed.

 

 

00:10:23,255 --> 00:10:26,826

Their values change frequently and past performance may not be repeated.

 

 

00:10:26,826 --> 00:10:31,030

Fees, expenses and commissions are all associated with fund investments.

 

 

00:10:31,030 --> 00:10:32,865

Thanks for tuning in. We'll see you next time.

 

 

00:13:29,675 --> 00:13:35,714

Subtitles are AI-Generated.

 

 

00:22:54,706 --> 00:22:59,111

Thanks for listening to, or watching, Fidelity Canada's The Upside podcast.

 

 

00:22:59,111 --> 00:23:03,048

Subscribe on your podcast platform of choice so you don't miss an episode.

 

 

00:23:03,048 --> 00:23:06,752

If you like what you're hearing please leave a review or a five-star rating.

 

 

00:23:06,752 --> 00:23:10,021

Fidelity mutual funds and ETFs are available by working with a financial

 

 

00:23:10,021 --> 00:23:12,924

advisor or through an online brokerage account.

 

 

00:23:12,924 --> 00:23:16,528

Visit fidelity.ca/howtobuy for more information.

 

 

00:23:16,528 --> 00:23:19,965

While on fidelity.ca you can also find more information on future live

 

 

00:23:19,965 --> 00:23:23,902

webcasts. Don't forget to follow Fidelity Canada on LinkedIn, YouTube,

 

 

00:23:23,902 --> 00:23:28,140

Instagram, or X. We'll wrap things up today with a quick disclaimer.

 

 

00:23:28,140 --> 00:23:31,443

The views and opinions expressed on this podcast are those of the participants

 

 

00:23:31,443 --> 00:23:35,781

and do not necessarily reflect those of Fidelity Investments Canada ULC or

 

 

00:23:35,781 --> 00:23:39,818

its affiliates. This podcast is for informational purposes only and should

 

 

00:23:39,818 --> 00:23:42,921

not be construed as investment, tax or legal advice.

 

 

00:23:42,921 --> 00:23:46,358

It is not an offer to sell or buy or an endorsement, recommendation or

 

 

00:23:46,358 --> 00:23:49,361

sponsorship of any entity or security cited.

 

 

00:23:49,361 --> 00:23:51,062

Read a fund's prospectus before investing.

 

 

00:23:51,062 --> 00:23:52,931

Funds are not guaranteed.

 

 

00:23:52,931 --> 00:23:56,501

Their values change frequently and past performance may not be repeated.

 

 

00:23:56,501 --> 00:24:00,705

Fees, expenses and commissions are all associated with fund investments.

 

 

00:24:00,705 --> 00:24:02,541

Thanks for tuning in. We'll see you next time.