FidelityConnects

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.

Portfolio manager David Tulk explores global asset allocation as we look ahead to the second quarter of 2021. David Tulk is a portfolio manager on the Global Asset Allocation (GAA) team, and he thinks economic growth looks strong coming out from under the drag of the pandemic. He thinks that as conditions start to normalize, the pent-up demand, combined with stimulus, will make for a great combination. He does note that we also need to look at policy after the pandemic: a big increase in levels of public sector debt could be a catalyst for future inflation. As it stands, there are a lot of flows into inflation protection assets. The team has been focused on inflation protection since before the pandemic; an increase in inflation could increase the correlation between stocks and bonds. Because of this, it’s been vital for them to mitigate the shock of inflation for the funds they manage.

Recorded on March 3, 2021.

Fidelity Investment Director Catherine Yeung is back on the program taking us through the value trade moving forward in 2021, inflation expectations in the Asian market, and where she is finding opportunities.  Catherine is seeing different value opportunities across industries like materials, industrials, and energy.  She is also seeing defensive value opportunities in the market such as bank and telecommunication companies.  Catherine believes there is value to be found in all sectors, even in tech sector.  She also comments on the economic recovery in China.  She notes the Chinese household savings rate has increased from 31% to 37%.   Semiconductor companies are benefiting because there is a shortage of supply in the market and semiconductor companies’ share price have rallied because of increase in demand.  Once the economy has recovered, spending will increase significantly.

Recorded on February 26, 2021. 

For portfolio manager Patrice Quirion, investing is about gathering research and taking calculated risks. Patrice shares how he first got into investing and his overall investment style for his funds, Fidelity Global Concentrated Equity Fund and Fidelity International Concentrated Equity Fund. He expands on the benefits of accessing Fidelity’s global research resources spread around the world, but experts on their own region and working towards the same company wide goal. Patrice started with Fidelity in 2005, and for him picking stocks and investing isn’t just a job, he loves what he does, where he works, and who he works with. Reflecting on the current market environment, Patrice believes the consumer (globally) is in good financial condition; saving rates went up, interest rates are low and asset prices went up, so there is a lot of wealth effect. Combining these factors, there is a pent-up demand to spend that has not been priced in. 

Recorded on February 25, 2021.

Institutional portfolio manager Naveed Rahman observes that markets saw a bit of a bounce-back for value toward the end of 2020 and the beginning of 2021. He believes that opportunities are compelling for reasonably priced companies with high ROEs that have potential to deliver attractive returns. Overall, he remains optimistic about value and quality stocks. Also, Naveed believes that given the combination of massive fiscal stimulus (especially in the U.S.) and the deployment of various approved vaccines around the world, the market is now focusing on what the economy will look like in a post–COVID-19 world. He thinks we will see a sharp snapback. Not only does the vaccine allow us to get back out there, but middle-class consumers have also built up massive amounts of savings, which is unusual coming out of a recession. As a result, he believes that economic growth could be robust in the second half of this year and going into 2022.

Recorded on February 25, 2021.

Recently, nominal yields have been rising due to higher inflation expectations; last week, however, real yields rose, by about 50 basis points, notes Jurrien Timmer, Director of Global Macro. In his weekly update, Jurrien believes that countries around the world are facing the same problem right now: debt levels are too high, and growth is slow. Before the pandemic there was talk of competitive devaluation; with interest rates low or even negative, countries wanted to see their currencies devalued, so that they could get out of debt jail relatively for free. Now policy makers are thinking instead that the world needs inflation: when debt stock is too high and rising, and there is no ability to grow out of it, the only option is to inflate your way out, either through currency devaluation or negative real rates. With policy makers increasingly wanting inflation, it could be more secure for investors to make portfolio moves aligned with that goal.

Recorded on March 1, 2021.

Portfolio manager Hugo Lavallée shares his contrarian viewpoint as markets and economies adapt to living in the time of COVID-19. Hugo notes that IPOs have been a great source of alpha for Fidelity Greater Canada Fund, which has flexibility to invest up to 49% in foreign markets. He considers some Asian IPOs to be interesting prospects, and is also looking at some Norwegian companies. He is currently maximizing opportunities in foreign markets where reopening seems to be happening faster than in Canada, but notes as well that Canadian growth stocks are often overlooked. Hugo is bullish on leisure stocks in reopening economies. Quality stocks, which are currently out of favour, are also of interest to him. They offer high free cash-flow yield: low-volatility names are offering 5%-plus.

Recorded on February 24, 2021.

In the 15th episode of the Fidelity ETF Exchange - powered by FidelityConnects, co-hosts Étienne Joncas Bouchard and Himesh Patel welcomed Vivian Hsu, Director of ETFs and Alternatives at Fidelity Canada, to the show. This episode is centered around the rise of the Multi-Asset ETF category in Canada. Key topics discussed include why have these ETFs become so popular over the past few years, what are some of the notable advantages of investing in an all-in-one ETF solution, as well as differentiating between the different types of Multi-Asset ETFs available to Canadian investors.

Recorded on February 25, 2021.

Will Danoff and Joel Tillinghast are veteran portfolio managers with different investment styles. For Canadian investors, Will and Joel co-manage Fidelity Global Growth and Value Class. This fund combines Will’s focus on growth and investing in “best-of-breed” firms with Joel’s focus on value, specifically companies undervalued by the market that have the potential for long-term capital appreciation. Will and Joel connect in from Boston, and comment how they miss being able to travel to Toronto to see their Canadian colleagues, but overall praise Fidelity’s response to transitioning to working from home throughout 2020. In addition to reflecting on 2020’s digital transformations, Will and Joel also look at how the market is now looking ahead to economies re-opening amidst the vaccine rollouts, and what sectors they are viewing more favourably.

Recorded on January 27, 2021.

Portfolio manager Dan Kelley examines how founder-led companies fared in 2020 and how thinking outside the box positions them well in the changing landscape in 2021. Dan manages Fidelity Founders® Class, and notes there is a lot of liquidity driving the markets; however, he tries not to get caught up in the noise, and focuses on finding stocks he believes are mispriced. There are around 700 companies in the U.S. that can be described as “founder-led” – over three times more than in any other country in the world – but Dan continues to look at increasing the international allocation of the Class, which is currently around 12–13%. Dan thinks the economy is likely to accelerate once people feel safe. He expects that we will retain some of the trends we have been using to work from home. For example, travel for work may be minimal, given the demonstrated effectiveness of online meetings.

Recorded on February 23, 2021.