Fidelity MoneyBuilder Income – fund changes

With effect from 26 May 2022, the Fidelity MoneyBuilder Income fund’s investment policy will change to incorporate an increased focus on sustainable investment.

The fund will continue to be managed by Sajiv Vaid and Kris Atkinson, managers we rate highly, utilising the same philosophy and approach as before. However, the investment process will be enhanced, with formalised integration of Environmental, Social and Governance (ESG) analysis, increased levels of engagement and the exclusion of companies involved in 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.

At least 70% of the fund will be required to invest in bonds issued by companies with sustainable characteristics, as defined by both Fidelity’s proprietary Sustainability Ratings and external ESG scores. The remainder invests in issuers demonstrating improving sustainable characteristics, and the managers will engage with these companies to agree improvement milestones and timescales.

In response to these changes, the fund’s name will change to the Fidelity Sustainable MoneyBuilder Income fund.

Our view

We think this move makes sense given that sustainability is now a key consideration for long term investors.

Minimal portfolio changes will be needed to bring the fund into line with its new approach. The managers’ focus on high quality issuers has naturally tended to lead them towards companies with strong sustainability characteristics in the past. They’ve also been cautious of areas like tobacco for some time, with increased litigation risk and more focus on health and wellbeing making the area less attractive for bond investors. This means we don’t expect the fund’s performance profile to change significantly as a result of the changes to the managers’ investment approach.

We also think it’s positive that the managers have worked together on Fidelity’s Sustainable Reduced Carbon Bond fund since early 2020, so a focus on sustainability is already embedded across the team.

Overall, we expect these changes to enhance an investment process we already held in high regard. For this reason, the fund retains its place on the Wealth Shortlist of funds chosen by our analysts for their long-term performance potential. As always, we will continue to monitor the situation and keep investors informed if our views change.

Past performance is not a guide to the future. Source: Lipper IM to 30/04/2022.

Please see the following link for the current Key Investor Information Document, this will be updated to reflect the changes as soon as we receive it from Fidelity.

Fidelity MoneyBuilder Income Key Investor Information