Fidelity MoneyBuilder Income wins Virgin challenge

As Fidelity's MoneyBuilder Income Fund celebrates its 15th anniversary this month, a long-forgotten wager has been resurrected for the benefit of a children's cancer charity.

Ian Spreadbury, manager of Fidelity's MoneyBuilder Income Fund, was looking back over 15 years at the helm of the fund when he recalled a Virgin air hostess was an unexpected guest at the launch event in September 1995. She issued a challenge to Fidelity on Sir Richard Branson's behalf. As part of the challenge, Virgin offered a week's holiday on Necker, Sir Richard's island retreat, to a charity of Fidelity's choice, as long as Fidelity met two conditions.

The first was that Fidelity should keep the annual management fee on the MoneyBuilder Income Fund at 0.7% for at least five years. Fidelity not only met this challenge, but 15 years later the annual management charge remains very low at just 0.8%.

The second part of the challenge was to reduce the annual management charge on the Fidelity MoneyBuilder Growth Fund to 1%. The charge was reduced and remains at this low level today.

Fidelity has won the challenge and Virgin has agreed to supply the prize, worth £35,000, to Fidelity's chosen charity CLIC Sargent which aims to ease the burden of childhood cancer on children, young people and their families.

Gary Shaughnessy, UK Managing Director at Fidelity Investment Managers, said: "This is not only good news for a very worthy charity, but for the thousands of investors who have benefitted from the low fees and good performance on our MoneyBuilder range. MoneyBuilder Income Fund was groundbreaking when it was launched 15 years ago, and today continues to offer investors a good deal."

With a focus on steady income generation by investing in high quality corporate bonds, the Fidelity MoneyBuilder Income Fund has delivered consistent returns over its benchmark since inception. The fund is first quartile since launch and over three, five and 10 years.

Reflecting on his 15 years managing the fund, Ian Spreadbury says: "The last 15 years have been a profitable but volatile time for fixed income investing.  Investors are always surprised to learn that over this time, corporate bonds have outperformed many risky asset classes such as equities. We have seen a secular bull run in bonds since the early 1990s and yields have fallen a long way.

"We are now at an interesting juncture. The down trend in yields is likely coming to an end but I can't see a sharp reversal any time soon.  The UK and other developed economies have a lot of problems to work through and high leverage is likely to keep the economy reliant on a low interest rate environment.  Irrespective of the current situation, however, corporate bonds have been an important asset class for investors, offering the enviable mix of regular income, low volatility and equity diversification, and I expect this to continue."