Fidelity Investments®, a leading global asset management firm with $1.9 trillion in managed assets, today announced the launch of the Fidelity Event Driven Opportunities Fund (FARNX), designed for investors working directly with Fidelity, and the Fidelity Advisor Event Driven Opportunities Fund (FCHSX), designed for financial advisors and defined contribution plan sponsors as a investment only option (DCIO).
These new, actively-managed mutual funds seek to uncover mispriced securities of companies due to special situation events such as spin-offs, index deletions, mergers and acquisitions, companies undergoing reorganizations, proxy fights, 13D filings and other special situations.
These events often have limited research coverage and can trigger automatic selling, offering an opportunity for active managers to invest in a down moment and generate alpha for shareholders over the long-term. Arvind Navaratnam led the design of the funds’ investment strategy and serves as portfolio manager.
"This is an area where active managers like Fidelity, with its expansive research capabilities and consistent attention to this part of the market, can uncover hidden gems in the securities world that offer investors new and potentially less-correlated sources of alpha and greater portfolio diversification," said Joseph DeSantis, chief investment officer, Fidelity’s Equity Group.
Unlike funds managed against a specific sector, market capitalization or style, these funds can "go anywhere" in the market, based on special situation events, leading to potentially lower correlations to the broad equity market. The funds are non-diversified strategies that will primarily invest in common stocks, but also have the flexibility to invest a portion of assets in bonds, including high yield.
Portfolio Manager Navaratnam joined Fidelity in 2010 with a background in private equity and special situation-type investing. Prior to Fidelity, Navaratnam worked as a private equity investment professional at Texas Pacific Group (TPG) and Rho Capital Partners. He has been in the industry since 2004. Navaratnam holds degrees in economics, philosophy, and engineering from Columbia University, as well as a master of business administration degree from Harvard Business School.