Should I buy the Fidelity Disciplined Equity fund?

Question: Can you give me any information on the Fidelity Disciplined Equity Fund? I could not find anything on it on your Mutual Funds On-Line Database. I know it follows the TSE 300 and is relatively new. – A.H.


It’s not in the Database because it doesn’t have a three-year record, which is a requirement for inclusion. It is on the Mutual Funds Update Recommended List and we carried a detailed write-up on it in the April 2000 issue which you can find it through the MFU search engine on the Member Page if you are a subscriber.

If you’re not, here’s a summary of what we had to say:

“An equity fund manager has to deal with many variables. It’s not simply a matter of picking good stocks. They have to be the right stocks, in the right sectors, at the right time, at the right price. Not easy.

“One of the ways to improve the odds is to reduce the number of variables. Index funds are the prime example of this; in such funds all variables are taken out of the equation except the movement of the underlying index (in foreign index funds, exchange rates create an additional variable).

“The Fidelity Disciplined Equity Funremoves the variable of sector weighting. This means that veteran manager Robert Haber does not need to concern himself with deciding which sectors of the TSE 300 Composite Index are likely to outperform and which are likely to be laggards. He doesn’t need to place a bet on energy versus media or on financial services instead of forest products. The fund’s portfolio is structured so as to reflect the actual sector weightings of the Index, so all Haber has to concern himself with is stock selection.

“This enables him to concentrate on choosing the companies within each sector that are deemed to have the best growth potential. So the success or failure of this fund will come down to the stock-picking acumen of Haber and the large Fidelity research team that backs him up.”

So far, the concept has worked very well. For the year to Nov. 30, the fund gained 27.7%, which ranked it number 13 out of 291 Canadian equity funds surveyed by the Southam Information and Technology Group. That’s a very credible start. – G.P.