One of the biggest names in the U.S. mutual fund industry has crossed the border.
Will Danoff, the stock picker behind the $100-billion (U.S.) Fidelity Contrafund – the world’s largest actively managed fund run by one person – is now accessible to Canadian investors.
The Fidelity Insights Class, a new Canadian fund launched on Thursday, will be based on the growth-stock-picking style that has made Mr. Danoff one of the world’s best-known market-beating fund managers.
“The new fund is going to be the very best ideas I have. It’s a best of Fidelity. No holds barred,” Mr. Danoff said at a Fidelity event in Toronto on Wednesday.
He has a list of about 75 stocks that he’s initially targeting for the new fund, which has a global scope with an emphasis on U.S. stocks. Fidelity estimates the B series fund will have a management expense ratio of about 2.4 per cent.
Mr. Danoff didn’t name any prospective holdings, U.S. or otherwise, but he said he did take the opportunity to meet with some high-powered management teams while in Toronto, including Royal Bank of Canada, Brookfield Asset Management Inc. and Fairfax Financial Holdings Ltd.
A signature of Mr. Danoff’s approach to investing is in forging relationships with management, to build a deeper understanding of companies’ growth prospects as a way to get an edge on the investing masses.
“In a given week, I’ll see an energy company, a consumer company, a financial company, a tech company. You can ask questions about the competition, about the whole industry,” he said, estimating he’s met with close to 35,000 companies in his nearly 30 years as a fund manager.
“This is how we learn, this is how we place our bets.”
Since he took the lead on Contrafund in 1990, he has posted an average annual return of 12.7 per cent, net of fees, which beat the S&P 500 index by 2.7 percentage points annually, on average. Over that time, the fund’s assets have grown from about $300-million to $103-billion, according to Morningstar data.
Some of his biggest wins have come from investing relatively early on in companies that would become tech giants, such as Google and Facebook.
Mr. Danoff still has his notes from a pre-IPO meeting with Sergey Brin, co-founder of Google, and Eric Schmidt, the company’s then-CEO. The company’s revenue growth was tracking at 100 per cent a year, with 40-per-cent margins, and $2-billion in cash, even before going public, Mr. Danoff said.
He soon became one of Google’s largest mutual fund shareholders as of the IPO.
Mr. Danoff got in on Facebook before its 2012 public offering.
“I knew this was a slam dunk, because I knew the people, I watched what they were doing,” Mr. Danoff said. Facebook’s stock is still one of the Contrafund’s biggest holdings, accounting for a 5.9-per-cent weighting.
“Mark [Zuckerberg] is doing a great job with Instagram and Facebook Messenger. There is a lot of growth still to come.”
It’s not every fund manager, of course, who can get an audience with Mr. Zuckerberg, Facebook’s co-founder and CEO, and the world’s fifth-richest man, according to Forbes.
Mr. Danoff’s track record and the sheer size of the Contrafund go a long way in getting calls answered.
“Everybody thinks I’m good. I’m just the biggest,” he said.
He uses these meetings to try to identify best-of-class companies with credible management teams that can generate superior earnings growth.
“The more companies you talk to, the more companies you research, the better you’re going to do,” he said.
He’s confident the market will continue to yield the kind of big winners that have fuelled his returns for several years.
“With rates going back up and oil prices rebounded, I think you’re going to see some growth. We’re seeing a lot of IPOs,” he said. “In terms of identifying new market leaders, I think we’re in a rich environment.”Report Typo/Error
- Royal Bank of Canada$93.010.00(0.00%)
- Royal Bank of Canada$74.220.00(0.00%)
- Brookfield Asset Management Inc$49.250.00(0.00%)
- Brookfield Asset Management Inc$39.280.00(0.00%)
- Fairfax Financial Holdings Ltd$606.300.00(0.00%)
- CBOE Google VIX Index16.58+0.05(+0.30%)
- Facebook Inc$168.710.00(0.00%)
- Updated August 23 3:59 PM EDT. Delayed by at least 15 minutes.