FidelityConnects

Matt Siddle, UK-based portfolio manager of Fidelity Europe Fund, discusses the implications of Europe's economic reopening and the diversification opportunities that exposure to Europe can provide to investors' portfolios. Europe has been more restrictive than the U.S. and Canada. Matt notes that the lockdowns have had a differential impact on the goods-producing part of the economy and the service parts of the economy causing a big divergence. He says he is interested in key names such as airlines and cruise ships; however, fashion retailers have lagged in the reopening rally. He also notes he is cautious of European banks broadly because of interest rates. Matt says a combination of good businesses with valuations that are more attractive is the core to the portfolio. Additionally, Matt shares his thoughts on the inflation debate and the extent to which ESG provides an alpha advantage.

Recorded on July 9, 2021.

Transcript (PDF): https://www.fidelity.ca/cs/Satellite/doc/transcript_podcast_europe_equities_outlook_econ_reopening.pdf

Kelly Lannan, Fidelity's Vice President of Young Investors, takes us through some of the latest trends and the habits and priorities of younger generations. Kelly believes the recent events of 2020 and 2021 have motivated young people to learn more about trading and investing, but Kelly believes younger investors are often prioritizing the shorter term over the long term when it comes to financial goals. Kelly also notes that a shift in technology has led to the rise of fractional shares trading, which is important because younger generations have told Fidelity via a recent U.S. study, that starting small is their preference. ESG is important to young investors as they want to work with companies that align with their values. However, this does not mean the end return is any less important to young investors. Additionally, Kelly believes that improving financial literacy among young people would lead to opportunities and makes firms more accessible and inclusive. She also shares that many people in younger generations are naturally risk-averse.

Recorded on July 8, 2021.

Transcript (PDF): https://www.fidelity.ca/cs/Satellite/doc/transcript_podcast_lannan_genzinvesting.pdf

As economies worldwide are transitioning to a new normal, investors discuss other transitions that might also be underway. Portfolio manager Ramona Persaud shares how she is approaching her portfolios as we transition from early to mid-cycle, her thoughts on ESG investing, and the sectors in which she finds opportunities. Ramona runs Fidelity U.S. Dividend Fund and is the sub-portfolio manager on many popular mandates. She was also recently named one of the 20 top female portfolio managers in the United States by Citiwire USA. Ramona shares that during the mid-cycle phase, things usually slow down as we are no longer at a blistering recovery pace. She says that she is leaning towards defensives; however, there’s good valuation opportunity in cyclicals related to pandemic recovery outside of the U.S. Ramona advocates for ESG investing and believes that capital should play a role in improving the world over time and not damaging it.

Recorded on July 7, 2021.

Many investors have recently been bombarded with conflicting information from the news and social media. Denise Chisholm, sector strategist, is back on the program to provide clear information on what may be ahead in the overall markets. Denise and host Pamela Ritchie discuss the U.S. payroll report, and Denise notes the report shows us how different this cycle is relative to past economic recoveries. Denise also identifies that wages are hitting an all-time high, but the number of jobs available is not confirming this. Denise shares that as much as valuation is informative, it is not predictive of what the equity market is pricing in. One of the predictive indicators she prefers is the dislocations in the equity market relative to the dislocations in the credit market. Additionally, Denise shares her thoughts on the direction of the U.S. dollar, and she’ll provides some comments on the market noting that she’s seen a rotation into cyclically oriented sectors as well as a mini rotation from value to growth.

Recorded on July 7, 2021.

As we move into the second half of 2021, U.S. employers added 850,000 jobs, and average hourly earnings were up, but unemployment ticked up slightly from the previous month. Director of Global Macro, Jurrien Timmer, joins us today to help us understand this data and potential policy implications for the Fed. Jurrien speaks with host Pamela Ritchie about the state of the U.S. economy and says payroll and manufacturing numbers have been great recently. However, he believes the market has some indigestion as we transition from the valuation to the earnings phase. During this transition, things can get bumpy, and the Fed will continue the dance with the market on how much policy they can lift without upsetting financial conditions. Jurrien discusses the COVID-19 delta variant noting that it adds to the counter-rotation story as it has the potential to slow down the reopening. Jurrien believes it is a temporary rotation, but it comes down to the stickiness of inflation. Jurrien also shares his thoughts on the OPEC story, the potential for stagflation, and unpacks the global regulatory story. Follow along with Jurrien’s charts on Twitter: @TimmerFidelity

Recorded on July 6, 2021.

Sarah Hoffman, Fidelity’s Vice President of AI and Machine Learning Research, explores the evolution of digital transformation and the implications of AI and machine learning trends for the wealth management industry. Prior to the pandemic, Artificial Intelligence and machine learning were massive topics for investors. So, as we reopen into versions of normalcy, Sarah discusses the state of AI as well as potential opportunities and challenges the industry may face. Sarah believes this pandemic highlighted a lot of socio-cultural awareness of biases for technology and AI. She says many companies and universities are trying to improve by becoming more aware of ethical considerations. Sarah notes that AI can be used to help investors choose investment strategies. However, it is important to be aware of the potential ethical issues that could come up. She also discusses using AI and technology to take away some parts of jobs humans don’t want for safety reasons. Additionally, Sarah shares her thoughts on the regulatory environment noting that it depends on the country as some are strongly regulated, while others have little regulation.

Recorded on June 29, 2021.

Transcript available (PDF): https://www.fidelity.ca/cs/Satellite/doc/transcript_podcast_hoffman_ai_machine_learning.pdf

Portfolio manager of Fidelity Global Real Estate Fund, Steve Buller, shares his perspectives on global commercial real estate and where he is finding opportunities as the global economy reopens. Steve shares that how inflation and interest rates actually affect global property stocks is more in perception than in reality. There is very little statistical correlation between global interest rates and the performance of global REITs. Steve notes that there are few specific geographical opportunities; however, there was a big bounce in the reopening trade sectors such as retail, hotels, and assisted living. Steve unpacks the future of office spaces and guesses that 80% of office space will be long-term and 20% will be flexible or coworking space. He believes that there will be a sizeable impact on the demand for office space over long periods of time because of remote working.

Recorded on June 25, 2021.

From the prospect of rising inflation to an uneven economic recovery, Ayesha Akbar, portfolio manager, shares her perspectives on global asset allocation in today’s market environment. Rising inflation and an uneven global economic recovery have exposed the disparities between wealthier countries and many emerging markets. Ayesha shares her insights on these topics and what she sees as the biggest risk for the markets six months into the year. Ayesha co-manages Fidelity Global Asset Allocation Fund. She believes that markets are worried that the Fed isn’t going to raise rates any time soon. Markets performed well during vaccine news, and since then, we have seen a consolidation phase. Communities that are lacking vaccinations are still suffering and lagging behind developed areas. She shares that economic restrictions have come back in many Asian countries with the lack of vaccinations, and consumer spending has slowed. Additionally, she discusses how she is currently positioned, noting that she has added a bit back to bond positions and is cautious of emerging markets. She also shares her thoughts on zero-interest bonds and discusses the possibility of growth stocks making a return.

Recorded on June 24, 2021.

As the Canadian economy begins to recover and reopen, Portfolio Manager and Director of Research Joe Overdevest shares his insights on key trends investors should be focused on with host Emily Anonuevo. Among other responsibilities, Joe co-manages Fidelity Global Natural Resources Fund alongside Darren Lekkerkerker. Joe centres this discussion on what he believes are the three main investment themes in the Canadian economy: earnings, commodities, and monetary and fiscal policy. The first theme is earnings. Joe notes that many stocks have moved up, but in the next year or so, we are going to determine where earnings didn’t go up as much as the market thought. Secondly, he believes as the Canadian economy opens, there’ll be more demand for commodities, which is positive for the Canadian market. Thirdly, there’s been a considerable amount of fiscal and monetary policy injected into the system; however, these policies are being lessened or taken away. Additionally, Joe shares what his role entails as Director of Research, which includes managing a team of research analysts. Joe also comments on the value of advice, and how ignoring the noise and headlines while staying focused on the long-term can be a wise approach.

Recorded on June 29, 2021.

Transcript available (PDF): https://mcdn.podbean.com/mf/web/9bquci/Overdevest_June29_Transcript.pdf

Jurrien Timmer, Director of Global Macro, shares his latest research across a range of different topics with host Pamela Ritchie. Jurrien says the COVID-19 resurgence discussion affects the market as bond yields are down from the highs and stocks going back to favouring the stable growers. He hopes that the vaccine will be able to mitigate some of the effects. Also, the housing market impacted financials as it leads to a wealth effect. Jurrien notes that on one side, those who have been unemployed and are collecting cheques, and on the other side, you have people who have remained employed and haven’t been able to spend money. Jurrien also discusses whether now is the time to go back to technology or stick with dividend-paying stocks. He shares that tech companies have strong cash flow; they don’t pay dividends typically, but they do buybacks. Follow along with Jurrien’s charts on Twitter: @TimmerFidelity

Recorded on June 28, 2021.