FidelityConnects

Andrew Clee, VP of Products and Paul Ma, VP and Lead Portfolio Strategist, are back on FidelityConnects to talk about portfolio construction. Specifically, themes that have emerged in the early part of 2021, including factor and ETF strategies to consider.  Paul believes the market indicators now reflect the back half of the early cycle where value and small cap stocks make a comeback.  Andrew notes that large cap stocks tend to do well in recessionary periods, but lag slightly in the early cycle.  Paul expressed his interest in the trend of Canadian and international equities outselling U.S. equities which is unusual in recent years.  Both also touch upon inflation, dividends in a 60/40 portfolio, and global growth versus North American value.  

Recorded on March 9, 2021.

Le gestionnaire de portefeuille Maxime Lemieux donne une mise à jour sur la vigueur du marché canadien et les perspectives pour l’avenir, et décrit la structure du Fonds Fidelity Frontière Nord dans le marché d’aujourd’hui. M. Lemieux est persuadé qu’à long terme, la planète reviendra à la normale grâce au déploiement de vaccins. Il révèle également le nom des entreprises sur lesquelles il se concentre maintenant, pour se préparer au rebond de l’économie. Il parle des leçons qu’il a retenues au cours de ses 25 années de travail auprès de Fidelity et les conseils offerts par ses mentors dans le passé. M. Lemieux partage ses opinions sur l’investissement dans les entreprises québécoises et comment il maximise la valeur de ses recherches.

Date : 10 mars 2021

Investment director Tom Stevenson provides the view from Europe, including the impact of the vaccine rollout, global trade and economic policies. Tom notes that the European Central Bank (ECB) is becoming increasingly concerned about the direction of bond yields. They are worried about the impact it will have on funding costs for individuals and businesses. On March 11, the ECB said they will leave the size of the bond buying program unchanged, but that it will increase its pace. Tom notes that this is a sign they are trying to keep bond yields in check. Also, Tom believes we are in the middle of an important transition between growth and value; it feels more like a secular shift which we often see in a long bull market. We are 11 years in a bull market, which seems long, but past bull markets have been 19 to 20 years long, and there were shifts from growth to value in the middle of those, which is where he thinks we are positioned now. 

Recorded March 12, 2021.

Portfolio manager and director of research Don Newman discusses the outlook for dividend-paying companies and dividend yields as the environment begins to change with the rollout of the vaccine. Don manages Fidelity Dividend Plus Fund, and he thinks the current dividend landscape looks good. A reopening trade is happening, which can be great for dividend stocks; interest rates are moving up; valuations and yields are both looking good; and there is, he adds, a compelling yield argument right now. As for inflation, Don thinks that the most critical thing is to protect a client’s purchasing power. A good way to do this is to invest in a dividend fund; as the prices rise, you can see more income through the dividend stream. Don currently holds more commodities than the average dividend fund manager. Commodities are cheap on a relative basis and very “under-owned” right now. He wouldn’t call what we are seeing a super-cycle, but he believes there has been underinvestment in the area in the last five to ten years. 

Recorded on March 11, 2021.

Portfolio manager Max Lemieux gives an update on the strength of the Canadian market, where we go from here and how he is positioning Fidelity True North® Fund in today’s markets. Also, Max shares details of his 25-year Fidelity career with host Emily Anonuevo. After graduating from McGill University, Max worked at Fidelity’s Boston office, before the Canadian investment team relocated to Toronto and Montreal in 2009. Max explains being immersed in Fidelity’s strong corporate culture was an incredible learning experience. Max’s process running Fidelity True North® Fund is based on fundamental analysis and research. He keeps a focus on small caps, looking for the tomorrow’s leaders that are expected to grow over the long term, and currently trading at reasonable valuation. Max notes that there are many new “green” companies in Canada that have interesting and resilient business models. He believes many of them are overvalued in the short term, but seem reasonably valued over the next three to five years; investors may just need to put up with some high short-term valuations. Max thinks that in the future, renewables will be a good opportunity, due to the green transition; many governments are already deploying money in this space.

Recorded on March 11, 2021.

Steve DuFour, portfolio manager of Fidelity U.S. Focused Stock Fund, discusses his view on U.S. equity valuations in this market and where he is finding opportunities. As we look ahead into 2021, Steve believes the strong relative earnings growers will be the stocks that were specifically hit harder by shutdowns. Last year, notes Steve, you had to be in secular growers to get performance in the U.S. markets. These wound up being mainly technology stocks. As we head into the second quarter of 2021, he thinks cyclical parts of the market look more attractive than the secular parts, and he’s been transitioning the portfolio to add more cyclical recovery plays. 

Recorded on March 10, 2021.

Sector Strategist Denise Chisholm notes that we’re now seeing a rare occurrence that is inflationary expectations accelerating relative to inflation. For investors concerned about whether inflation is a good or bad thing, she adds that recent history suggests inflation might be better for the market than we think, and the market might expand in terms of multiples expansion, pricing out the risk of deflation. Denise notes that the rapid steepening of the yield curve currently happening is typically the sweet spot for cyclicality in sectors or factors. From a sector perspective, that is anything economically sensitive like financials, energy, industrials and equal-weighted consumer discretionary, and a rotation away from sectors she would classify as classically defensive, such as consumer staples, utilities, big pharmaceutical companies, and to a lesser extent real estate.  She thinks this rotation will be a dominant trend over the next 12-18 months.

Recorded on March 8, 2021.

Portfolio manager Steve Buller manages the Fidelity Global Real Estate Fund and on this episode he discusses the impact of COVID-19 on global commercial real estate since the beginning of the year, as well as the catalysts to look for as we head into the second quarter of 2021. He explains how global real estate fits in the reopening trade and thoughts on real estate as a diversifier.  Steve notes that retail, office and hotels were affected the most during the pandemic, but they are slowly starting to reopen and he anticipates that will continue. He also sees a recovery of global mall stocks since the November vaccine announcement.  He believes office spaces will start to fill up in parts of Asia as oppose to North America and Europe, countries that have adopted a more working-from-home environment.  

Recorded on March 5, 2021.

Chief Investment Officer and portfolio manager Andrew Marchese shares how he first got into investing after initially beginning his education in pharmacology, and also shares highlights from his career which first started with Fidelity in 1998. Andrew speaks on his investing principles, which preaches moderation, patience, and a disciplined long-term approach. Andrew explains how investors today are surrounded by a lot of information, and a lot of opinions on social media, the news, and other places. Investors should avoid the noise and have a clear idea of their personal goals. Andrew also shares his Canadian and global market outlook, and how he is positioning Fidelity Canadian Disciplined Equity® Fund to add value for his investors.

Recorded on March 5, 2021.

Fixed income portfolio manager Sri Tella discusses global trade, government debt levels, low interest rates and their impact on Canadian investors. Sri believes the environment for the bond market will be challenged over the next year or so with pressure for rates to move higher and central banks removing some stimulus. He explains that negative bond returns are typically followed by a high single digit return for bonds the following year; and while we can’t time the market and will likely see some volatility, it’s important to stay diversified, and bonds can offer protection for increased volatility. Sri attributes the strength of the Canadian dollar to the U.S. dollar’s weakness. The Canadian dollar hasn’t performed well compared to other countries and the U.S. seems to be on a trajectory of faster growth than Canada – though Canada’s numbers are surprisingly good. The Federal Reserve has indicated it’s willing to let the economy run hotter, which could keep rates lower than Canada.

Recorded on March 4, 2021.