Fidelity launches new U.S. income funds

“Today, macro-economic issues like the current low-interest environment and ongoing global economic uncertainties are top of mind for many investors. These uncertainties can make it hard for anyone to focus on the long-term investments,” said Craig Strachan, vice president, head of product, Fidelity Investments Canada. “However, if investors look past these uncertainties we believe that there are positives in the markets including the health of corporate America.”

The U.S. market has many stable high quality companies with strong global brands. Interbrand’s survey of the best global brands illustrates the dominance of the U.S. – the top eight brands were all U.S. companies, as were 14 of the top 20.

Fidelity U.S. Dividend Fund

Fidelity U.S. Dividend Fund leverages the depth and breadth of Fidelity’s fundamental research coverage to identify high-quality U.S. dividend paying equities. The fund is designed as a core holding that provides Canadian investors the potential for capital appreciation and income. The asset class and the U.S. dollar exposure that the fund provides offer great diversification benefits for Canadian investors.

“Investing with a focus on dividend-paying stocks has historically delivered a number of desirable outcomes,” said Strachan. “Many companies in the U.S. currently have a high level of cash on their balance sheets, which may increase their capacity to pay dividends. Given these conditions, we believe this is an excellent time for Canadians to look at U.S. dividend fund options for their portfolios.”

The fund is managed by James (Jim) Morrow who runs a similar fund for U.S. investors. He began his career at Fidelity in 1998 as a research analyst and has extensive experience managing funds for investors in the United States.

Fidelity’s suite of monthly income funds

For income-seeking investors who do not want full equity exposure, Fidelity U.S. Monthly Income Fund joins Fidelity Investments Canada’s existing suite of monthly income funds, including Fidelity Monthly Income Fund and Fidelity Global Monthly Income Fund. This new fund is another option for investors looking for regular income and the potential for capital appreciation.

Managing Fidelity U.S. Monthly Income Fund are Geoff Stein and Mariana Egan. Stein is one of the portfolio managers of Fidelity Monthly Income Fund. Stein and Egan are also the portfolio managers of the Fidelity Global Monthly Income Fund. Both are asset allocation experts that leverage Fidelity’s extensive global macro research. While the neutral mix is 50% equity and 50% fixed income, the fund may over- or underweight asset classes to aim to manage risk and seek to capitalize on changing market conditions.

More tax-efficient options for income investors

Fidelity Investments Canada is also expanding its capital yield offering by launching Fidelity Tactical Fixed Income Capital Yield Fund and Fidelity U.S. Monthly Income Capital Yield Fund. The capital yield versions of these funds seek to provide a return similar to that of Fidelity Tactical Fixed Income Fund and Fidelity U.S. Monthly Income Fund, respectively, less transaction and hedging costs, while generating tax-preferred capital gains, thereby aiming to enhance the investor’s after-tax returns.

These new capital yield products build on the success of Fidelity Investments Canada’s other capital yield products which have had great support from investors and advisors.

“One of the many challenges financial advisors face is educating their clients on how they can meet their retirement goals. It’s not easy finding options that could provide the cash flow for an investor’s retirement. At the same time it is easy for investors to underestimate not only how much income they will need, but also how long they will live in retirement,” said Strachan. “Financial advisors have a pivotal role in helping their clients understand this dichotomy, and in today’s low interest rate environment it’s important to consider options that provide exposure outside of Canada.”