Fidelity Sustainable MoneyBuilder Income Class W - Accumulation (GBP)

The fund's managed relatively conservatively. So we think it will lag others during the good times, but could make up for this by providing some shelter when markets fall.

During 2022 this was not the case, with the fund losing more of its value than peers. The biggest cause of this has been bonds that the fund hasn't been invested in. The managers had very little invested in government bonds or quasi sovereign bonds (those issued by companies that are part owned by governments or have significant revenue from government contracts). As the market has sold off, those bonds typically did not lose as much value because of government backing, meaning they are less likely to default on future payments.

While this is disappointing and has impacted longer term returns, we still think that the fund has the potential to outperform peers in future.

The managers think quite defensively. They use Fidelity's extensive in-house research team to help put together a fund that invests across lots of different bonds and sectors. This means no single area should dominate the fund and have a significant negative effect on performance. They think this will help deliver excellent long-term performance and see the fund through tougher times.

The team formalised integration of Environmental, Social and Governance (ESG) analysis in 2022. This means increased levels of engagement and the exclusion of companies who generate a meaningful amount of their revenues from controversial areas, such as weapons, tobacco, thermal coal and gambling. The managers will also avoid companies violating the UN Global Compact - a UN pact on human rights, labour, the environment and anti-corruption.

Most bond managers analyse the bigger economic picture and Atkinson and Pankhania are no different. But we also think a particular strength of the Fidelity team is analysing the companies that issue bonds. It helps them determine which are the most attractively priced.

The fund can invest overseas but you should expect it to retain a strong UK bias. It includes collateralised debt, where borrowers have to post security for a loan in the same way that you might use a house as collateral for a mortgage. The investor has something to rely on if the borrower doesn't pay money owed to bond holders. This differentiates the fund from some others. The managers also makes use of their ability to invest in lower-risk government bonds and can invest in high yield bonds and derivatives, both of which can increase risk.