The Upside: Fund Feature: Unpacking Fidelity Global Natural Resources Fund

00:00:13,046 --> 00:00:15,148

Hello, and welcome to the Upside fund feature.

00:00:15,148 --> 00:00:19,152

I'm Helen Pang. I'm here today with Madeleine Kaminski, an investment associate

00:00:19,152 --> 00:00:21,554

on the product research team here at Fidelity.

00:00:21,554 --> 00:00:25,792

She covers the Fidelity Global Natural Resources Fund  which is a very topical

00:00:25,792 --> 00:00:27,894

fund in today's markets. Welcome back, Maddie.

00:00:27,894 --> 00:00:29,262

Good to see you again.

00:00:29,262 --> 00:00:31,031

Thanks for having me, Helen.

00:00:31,031 --> 00:00:34,467

The strength of natural resources has been dominating headlines in recent

00:00:34,467 --> 00:00:39,005

months, especially during a time when geopolitical tensions are running high.

00:00:39,005 --> 00:00:43,243

In 2025 gold was the top performing asset class hitting record highs

00:00:43,243 --> 00:00:46,346

so it's a perfect time to be talking about Fidelity Global Natural Resources

00:00:46,346 --> 00:00:49,082

Fund. Can you walk us through the basics of this fund?

00:00:49,082 --> 00:00:50,583

Tell us all about it.

00:00:50,583 --> 00:00:54,854

Absolutely. Managed by seasoned portfolio managers Darren Lekkerkerker

00:00:54,854 --> 00:00:59,259

and Joe Overdevest, Fidelity Global Natural Resources Fund provides

00:00:59,259 --> 00:01:03,596

investors with diversified exposure to natural resource-focused equity

00:01:03,596 --> 00:01:06,399

securities across the globe.

00:01:06,399 --> 00:01:10,603

While both managers co-lead the strategy Darren focuses on the material

00:01:10,603 --> 00:01:14,541

side while Joe specializes in the fund's energy investments.

00:01:14,541 --> 00:01:18,778

Both managers follow a fundamental bottom-up approach focused

00:01:18,778 --> 00:01:22,849

on selecting high quality opportunities for the portfolio.

00:01:22,849 --> 00:01:26,653

They manage the fund with a concentrated approach with total holdings typically

00:01:26,653 --> 00:01:28,688

ranging between 40 and 60.

00:01:28,688 --> 00:01:32,992

I am a bottom-up investor, what that means for

00:01:32,992 --> 00:01:37,230

our listeners is I try to focus on owning the best companies as opposed

00:01:37,230 --> 00:01:41,568

to trying to predict or forecast economic variables or different

00:01:41,568 --> 00:01:46,172

markets. I think that that approach yields in higher returns over

00:01:46,172 --> 00:01:46,840

time.

00:01:46,840 --> 00:01:50,910

As mentioned, natural resource equities have been a lucrative space for

00:01:50,910 --> 00:01:54,747

investment over the past year. Can you share the portfolio manager's recent

00:01:54,747 --> 00:01:56,483

outlook on the market?

00:01:56,483 --> 00:01:58,218

That's correct, Helen, they have.

00:01:58,218 --> 00:02:02,689

Fidelity Global Natural Resources Fund has experienced strong absolute and

00:02:02,689 --> 00:02:07,360

relative performance in the beginning months of the year, delivering over 20%

00:02:07,360 --> 00:02:11,564

in absolute performance and over 2% in excess return to its benchmark

00:02:11,564 --> 00:02:14,901

in just the beginning two months of this year.

00:02:14,901 --> 00:02:19,205

Despite geopolitical tensions and volatility persisting through 2026

00:02:19,205 --> 00:02:23,476

the managers hold a positive outlook on the current macroeconomic backdrop.

00:02:23,476 --> 00:02:27,080

They highlight the strength of the economy and positive environment for stock

00:02:27,080 --> 00:02:30,416

picking across the global natural resource complex.

00:02:30,416 --> 00:02:32,252

I am macro aware. I think the macro environment's supportive.

00:02:32,252 --> 00:02:37,157

The economy is stable and accelerating, inflation

00:02:37,157 --> 00:02:40,360

tends to be coming down from elevated areas.

00:02:40,360 --> 00:02:44,397

There's a little bit of risk there as Q1 will probably be the peak

00:02:44,397 --> 00:02:48,501

tariff pass-through but markets are forward looking as to what the

00:02:48,501 --> 00:02:52,472

tariff rates are going forward. In terms of the overall market,

00:02:52,472 --> 00:02:56,576

short rates are probably coming

00:02:56,576 --> 00:03:00,547

down and you have double-digit earnings growth.

00:03:00,547 --> 00:03:04,617

Earnings growth has accelerated in the fourth quarter so far, 13%

00:03:04,617 --> 00:03:06,486

year-over-year.

00:03:06,486 --> 00:03:10,523

I think that's up from around 10, 11-ish per cent in the previous quarter.

00:03:10,523 --> 00:03:14,127

It seems like a pretty nice backdrop for stock picking.

00:03:14,127 --> 00:03:17,397

As I mentioned in my earlier point, I think there's higher dispersion that

00:03:17,397 --> 00:03:21,501

we're seeing now so I think there's a better opportunity for stock picking and

00:03:21,501 --> 00:03:22,969

stock pickers to beat the index.

00:03:22,969 --> 00:03:26,940

In the last 12 months or even two years we're seeing how geopolitics

00:03:26,940 --> 00:03:30,910

are affecting many sectors. I think, at least right now,

00:03:30,910 --> 00:03:34,981

Canada actually stands very high in terms of people trust Canada and

00:03:34,981 --> 00:03:39,052

people trust not only for oil but other resources or other goods

00:03:39,052 --> 00:03:40,920

as well. That's great.

00:03:40,920 --> 00:03:44,490

Our standing relatively is actually probably going higher, not lower.

00:03:44,490 --> 00:03:48,695

I think what happens as well is that when you look at Canada,

00:03:48,695 --> 00:03:52,832

we also have, obviously, a relationship with the US but also

00:03:52,832 --> 00:03:54,867

we have a global market access.

00:03:54,867 --> 00:03:57,237

I think that's really where we can develop ...

00:03:57,237 --> 00:04:01,174

you look at major, let's say, oil supply, OPEC's number one, other suppliers

00:04:01,174 --> 00:04:05,211

in the world actually growing are the US and that relationship maybe has

00:04:05,211 --> 00:04:07,647

been tarnished a little bit globally.

00:04:07,647 --> 00:04:11,684

On the margin your top two kind of growth areas already

00:04:11,684 --> 00:04:15,021

kind of looking like, well, maybe we should look to Canada, and the other areas

00:04:15,021 --> 00:04:18,791

would be offshore, maybe Africa, which, of course, comes with some risk as

00:04:18,791 --> 00:04:22,962

well. To your point of almost like knocking off

00:04:22,962 --> 00:04:26,966

some names, Canada stands out

00:04:26,966 --> 00:04:29,702

as something that we'd be opposite to some of these.

00:04:29,702 --> 00:04:33,439

Really, what we're looking for now in particular, our governments as well to

00:04:33,439 --> 00:04:37,343

negotiate some of the things would be very beneficial for the country.

00:04:37,343 --> 00:04:41,381

The resource is there, the producers want to do it, we have the people to

00:04:41,381 --> 00:04:45,385

do, it's really a matter of maybe dotting the Is of some of those

00:04:45,385 --> 00:04:46,786

contracts.

00:04:46,786 --> 00:04:50,857

What areas within natural resources are most compelling to the managers

00:04:50,857 --> 00:04:52,125

right now?

00:04:52,125 --> 00:04:55,862

The managers highlight that the current macroeconomic environment reflects a

00:04:55,862 --> 00:05:01,034

complex interplay of supply, demand, and macroeconomics factors.

00:05:01,034 --> 00:05:04,804

On the material side of the portfolio Darren has found compelling investment

00:05:04,804 --> 00:05:08,541

opportunities within copper and gold equities.

00:05:08,541 --> 00:05:12,979

Within energy Joe has found attractive opportunities within uranium and

00:05:12,979 --> 00:05:16,683

continues to be positive on opportunities across oil and gas.

00:05:16,683 --> 00:05:21,954

I think just generally the demand drivers of US dollar diversification,

00:05:21,988 --> 00:05:26,859

elevated geopolitical risks, countries around the world

00:05:26,859 --> 00:05:30,963

monetary stimulus and larger budget deficits of populist governments,

00:05:30,963 --> 00:05:35,101

probably set to continue. I think that demand will still be there for gold.

00:05:35,101 --> 00:05:40,173

It's gone up a lot recently so it's hard to see what it does in the near term.

00:05:40,173 --> 00:05:42,742

I think, generally, I still like it for copper.

00:05:42,742 --> 00:05:45,178

I think it's also a hard asset play.

00:05:45,178 --> 00:05:49,382

We mentioned earlier about stockpiling in the US, US government directly

00:05:49,382 --> 00:05:51,617

investing, that seems quite bullish.

00:05:51,617 --> 00:05:53,886

The supply side is very bullish.

00:05:53,886 --> 00:05:58,891

There's been four large mines that are not producing due to

00:05:58,891 --> 00:06:02,528

political reasons or mine operations issues.

00:06:02,528 --> 00:06:06,366

The demand side could be a little better, 50% comes from China, that demand

00:06:06,366 --> 00:06:10,103

tends to be a little bit softer.

00:06:10,103 --> 00:06:12,438

I think the price of copper is up a lot.

00:06:12,438 --> 00:06:14,440

It's above its fundamental price.

00:06:14,440 --> 00:06:18,177

I think in my view at the same time there's other bullish characteristics of

00:06:18,177 --> 00:06:20,513

it.

00:06:20,513 --> 00:06:22,415

Darren and I run Global Natural Resources.

00:06:22,415 --> 00:06:24,851

Of course, to anyone else  we look at resources here [indecipherable]

00:06:24,851 --> 00:06:28,888

supply-demand. The tightest supply-demand would be gold and copper.

00:06:28,888 --> 00:06:32,258

We'll get into gold because it's not really a supply demand but tightest

00:06:32,258 --> 00:06:36,496

commodities or attractiveness, gold, copper would be up there

00:06:36,496 --> 00:06:39,065

and then probably oil would be next and uranium.

00:06:39,065 --> 00:06:42,301

Uranium probably a little higher than oil right now just because there's short

00:06:42,301 --> 00:06:45,238

term demand for it. The reason why we got here is still here.

00:06:45,238 --> 00:06:49,275

The reason we got here, again, I've been doing this for a while, sometimes

00:06:49,275 --> 00:06:51,978

it's interest rates, sometimes the US dollar, now it's central banks.

00:06:51,978 --> 00:06:56,249

After Ukraine situation happened central banks said, you know what, maybe

00:06:56,249 --> 00:06:58,384

I shouldn't own so much US dollar Treasury.

00:06:58,384 --> 00:07:02,422

You're seeing a mix shift. Almost all the major central bankers on the

00:07:02,422 --> 00:07:05,725

margin are adding a little more gold and a little less US dollars, just a

00:07:05,725 --> 00:07:09,162

little bit on the margin. That's a big buying power.

00:07:09,162 --> 00:07:13,166

We talk about ETFs, trust me, central bankers will dwarf many other buyers

00:07:13,166 --> 00:07:15,568

in the market by a significant margin.

00:07:15,568 --> 00:07:20,206

That continues, the central banks continuing to buy gold.

00:07:20,206 --> 00:07:24,777

Now, the kicker more recently is US dollar has been weak, been connected to

00:07:24,777 --> 00:07:29,582

interest rate cuts in the US, in particular by the Fed the last 12 months.

00:07:29,582 --> 00:07:32,718

What's going on in gold? Yes, there's lots of volatility.

00:07:32,718 --> 00:07:36,956

Again, there'll be a Fed announcement who's the new Fed

00:07:36,956 --> 00:07:38,057

leader.

00:07:38,057 --> 00:07:41,828

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

00:07:41,828 --> 00:07:45,598

Instagram, YouTube, LinkedIn, Facebook, and Reddit for more great content and

00:07:45,598 --> 00:07:49,635

the latest financial updates. You can also head to fidelity.ca's investor

00:07:49,635 --> 00:07:53,940

education section to check out our articles, sign up for The Upside newsletter,

00:07:53,940 --> 00:07:57,677

get information about upcoming live webcasts and on-demand videos.

00:07:57,677 --> 00:08:00,613

Whether you're learning investment basics or looking for more advanced

00:08:00,613 --> 00:08:06,219

knowledge we can help you become a more informed investor.

00:08:06,219 --> 00:08:10,089

As always, [audio cuts out] is the best investment you can make.

00:08:10,089 --> 00:08:11,991

Thanks for watching and I hope you'll join us again on The Upside.

00:08:29,342 --> 00:08:33,646

Thanks for listening to, or watching,

Fidelity Canada's The Upside podcast.

00:08:33,646 --> 00:08:37,416

Subscribe on your podcast platform

of choice so you don't miss an episode.

00:08:37,416 --> 00:08:41,287

If you like what you're hearing,

please leave a review or a five star rating.

00:08:41,287 --> 00:08:44,123

Fidelity Mutual Funds

and ETFs are available by working

00:08:44,123 --> 00:08:47,527

with a financial advisor

or through an online brokerage account.

00:08:47,527 --> 00:08:51,063

Visit fidelity.ca/howtobuy

for more information.

00:08:51,063 --> 00:08:55,434

While on fidelity.ca, you can also find

more information on future live webcasts,

00:08:55,434 --> 00:09:00,306

and don't forget to follow Fidelity Canada

on LinkedIn, YouTube, Instagram or X.

00:09:00,306 --> 00:09:02,708

We'll wrap things up today

with a quick disclaimer.

00:09:02,708 --> 00:09:05,044

The views and opinions

expressed on this podcast

00:09:05,044 --> 00:09:06,512

are those of the participants,

00:09:06,512 --> 00:09:10,416

and do not necessarily reflect

those of Fidelity Investments Canada ULC

00:09:10,416 --> 00:09:11,617

or its affiliates.

00:09:11,617 --> 00:09:14,120

This podcast is for informational

purposes only

00:09:14,120 --> 00:09:17,557

and should not be construed as investment,

tax or legal advice.

00:09:17,557 --> 00:09:20,793

It is not an offer to sell or buy,

or an endorsement, recommendation

00:09:20,793 --> 00:09:23,896

or sponsorship of any entity or securities

cited.

00:09:23,896 --> 00:09:25,865

Read a funds prospectus before investing.

00:09:25,865 --> 00:09:27,567

Funds are not guaranteed.

00:09:27,567 --> 00:09:31,037

Their values change frequently

and past performance may not be repeated.

00:09:31,037 --> 00:09:35,274

Fees, expenses and commissions

are all associated with fund investments.

00:09:35,274 --> 00:09:37,476

Thanks for tuning

in. We'll see you next time.