The Upside: Fund in focus: Fidelity Global Small Cap Opportunities Fund

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Hello, and welcome to The Upside, fund feature edition.

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I'm Helen Pang. I'm here today with Ashok.

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Ashok is an investment analyst who covers the Fidelity Global Small Cap

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Opportunities Fund. Hi Ashok.

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Hi Helen.

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Please tell us a bit about what you do as an investment analyst.

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For sure, Helen. As an investment analyst I'm part of the broader product team

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here at Fidelity and act as the subject matter expert on investment

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strategies that I cover. That includes both Canadian and global equity funds,

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one of which is Fidelity Global Small Cap Opportunities Fund.

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I don't make investment decisions myself, that's entirely the investment

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management team's responsibility, but I do work closely with the investment

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team to understand what's happening inside the portfolio and why.

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You can think of my job a little bit as helping connect the dots between the

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portfolio managers and the rest of the firm, whether that's the sales team,

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marketing or directly with clients.

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I help interpret and communicate the strategy's positioning, performance and

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how the managers are navigating the current market environment.

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The fund is managed by Connor Gordon and Chris Maludzinski with 16 and

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17 years of experience in industry, respectively.

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Since inception it has continued to outperform.

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As of the end of July the fund has outperformed its benchmark, MSCI All-Country

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World Small Cap Index, by 7.9%, with an annualized return

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of 23.9% outperforming 97% of its peers

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since its inception in September of 2022, with the

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Institutional Trust being launched in 2019.

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Fidelity Global Small Cap Opportunities Fund has a medium risk rating and

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has, historically, outperformed this benchmark.

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Connor and Chris leverage Fidelity's vast research capabilities and has a

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proven security selection process.

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For those of you that are not familiar with the strategy, Fidelity Global Small

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Cap Opportunities was launched in 2019 as a global go-anywhere,

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best ideas portfolio to use Fidelity's global research platform

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to build a concentrated, high-performing fund for investors.

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The strategy is based on three pillars, quality, inflection points and

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concentrated risk management.

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We search globally for profitable, predictable, growing businesses that are

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undergoing an inflection point which allows us to underwrite higher earnings,

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higher multiples and, ultimately, higher stock prices.

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When we refer to inflection-points we're referring to both thematic and

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idiosyncratic change. For instance, thematic inflection points refer to changes

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in technology, consumer behaviour, government policy and industry

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supply-demand dynamics.

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Idiosyncratic inflection points refer to changes in strategy, management

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and corporate restructuring and short term price dislocations.

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We package our best ideas into a relatively concentrated 60-80 stock portfolio

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designed to generate a high tracking year, alpha generative fund for

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investors.

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Rather than looking at the overall economic environment, Connor and Chris are

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focused on maintaining a diversified portfolio less tied to economic or

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industry-specific factors with an emphasis on analyzing and selecting

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stocks or companies with the best potential and capitalizing on

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overlooked opportunities in the small and mid-cap space.

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This strategy has not only yielded substantial alpha as of July 31,

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2025, but also offered investors significant diversification

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benefits. Volatility is a key driver in uncovering these opportunities

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as it allows the managers to evaluate mispricing and potential long term value

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across the investment landscape.

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Recent market instability has undoubtedly worked in favour of this strategy by

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presenting new investment opportunities.

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We think today is a particularly good time to consider adding both global and

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small-cap exposure to your portfolios.

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As the market has become increasingly narrow in recent months returns have

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refocused in U.S. mega-caps.

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This has reintroduced significant concentration risk across geography,

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market cap and sector, specifically technology.

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We would highly suggest investors consider expanding their opportunity set and

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diversifying their exposure outside the current market leadership.

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Small-caps can be a bit of a blind spot for investors, especially global

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small-caps. Many portfolios lean large-cap by default.

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Even those that do include small-caps tend to focus on the

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U.S., but by ignoring global small-caps investors are, potentially,

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missing a huge part of the market, nearly 30,000 listed companies around

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the world.

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Helen, that's right. It's a really big opportunity set and one that's often

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overlooked. Fidelity Global Small Cap Opportunities Fund is built to

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take advantage of this. It's an unconstrained bottom-up strategy that looks

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to uncover idiosyncratic alpha driven by stock selection and not sector

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or regional calls. The managers build a concentrated portfolio from

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the bottom up based on a fundamental analysis.

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They're looking for high quality businesses trading at attractive valuations,

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they're quick to exit names when the thesis breaks down.

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There's no set holding period in the fund.

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They'll hold on if the opportunity persists or move on if it doesn't.

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What really sets the team apart is how disciplined they are in rotating risk.

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Where markets are volatile or narrow, as they have been recently, they don't

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try to chase returns. Instead they lean into their process and actively

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reallocate capital from more extended or headline driven areas of the market

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into names improving fundamentals and more attractive risk-reward.

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During the period of volatility that we saw earlier this year the managers had

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methodically de-risked the portfolio, trimming exposure to crowded trades

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and moving into parts of the market that have been more neglected

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but where underlying fundamentals are beginning to improve.

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That includes some housing-related businesses, early cycle names in

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semi-conductors and even select opportunities in beaten down sectors like

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health care.

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The Series F version of the fund has consistently ranked in the top decile

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since inception, reflecting its ability to deliver strong results over

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the long term even across a variety of market conditions.

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For sure. That really speaks to the consistency of the manager's process.

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They've designed the fund to be resilient not just in terms of downside

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protection but also in how they adapt to evolving market dynamics.

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Their focus remains firmly on long term compounding rather than reacting to

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short term noise.

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While they remain selective in this environment they've also been finding

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reasons to be optimistic.

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Valuations across certain high quality areas that they've been monitoring are

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becoming more attractive again and dispersion could start to pick up.

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What does that mean for positioning going forward?

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Right now the managers are looking for those inflection points where the market

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may have overreacted to a negative shift or underappreciated a positive

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one. They talked about the best opportunities often showing

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up in neglected corners of the market, names are often overlooked because

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they're out of favour or don't fit the current narrative.

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Their watch list is always evolving.

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They're constantly reviewing valuation spreads, return profiles and earnings

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resets waiting for the right entry point.

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When they see a risk-reward shift in their favour they're ready to reallocate

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quickly and decisively.

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Even in this narrow and volatile market the fund has maintained broad

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diversification across regions and sectors, and that's by design.

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The goal isn't to time macro trends, necessarily, but to find fundamental

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mispricing across a very wide universe.

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What about small-caps as an asset class?

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Small caps have been out of favour for quite some time, which means there's

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likely a lot of embedded opportunity.

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Historically, small-caps had outperformed large caps coming out of periods of

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narrow leadership and we're starting to see early signs of that sentiment maybe

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shifting. The key here is to have that exposure in place before that

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turn happens because when markets do broaden out they tend to do so quickly

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and the names that are currently underperforming can re-rate quickly as well.

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That's what the managers are preparing for right now.

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They've trimmed where needed, taken some profits in areas that have run ahead

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and repositioned into names with stronger forward-looking return potential.

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Thank you. That's all for today's show.

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

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

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

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affiliates. This podcast is for informational purposes only and should not

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be construed as investment, tax, or legal advice.

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sponsorship of any entity or security cited.

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Read a fund's prospectus before investing. Funds are not guaranteed.

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

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

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