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Fidelity Investments launches event-driven mutual funds for investors and advisors

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Fidelity Investments has launched its first actively-managed, event-driven mutual funds for both individual investors and financial advisors.

The Fidelity Event Driven Opportunities Fund (FARNX) and the Fidelity Advisor Event Driven Opportunities Fund (FCHSX) seek to uncover mis-priced securities of companies due to special situation events such as spin-offs, index deletions, mergers and acquisitions, companies undergoing reorganisations, 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,” says Joseph DeSantis, chief investment officer, Fidelity’s equity group.
 
Unlike funds managed against a specific sector, market capitalisation 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. 

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