FidelityConnects

For the last 40 years, investors have generally had to make two portfolio decisions: equities or bonds, and what’s the appropriate mix? In a world of ultra-low interest rates and heightened uncertainty, Andrew Clee and Rory Poole discuss the emergence of liquid alternatives as a third asset class, including why now, how they work and how they fit in an overall portfolio. Alternatives strategist Rory Poole notes that alternatives offer investors an opportunity to benefit from strategies other than traditional long-only investment products, and that Fidelity is well equipped to be in the alternatives space, due to the quality of research that has made Fidelity’s existing lineup so successful over time. Vice President of ETFs Andrew Clee adds that in the current low-interest-rate environment, it can be harder to meet return objectives and stay within risk objectives without increasing equity exposure; alternatives can allow for diversification and returns from different streams.

Recorded on November 13, 2020.

Our Fidelity expert panel reflects on the current market environment, and provides an in-depth analysis of the industrials and financial services sectors. Director of research and portfolio manager Joe Overdevest leads the discussion, along with equity research analysts Nicolas Bellemare and Andrew Hall. Reflecting on recent market activity, Joe explains we are seeing historically high levels of fiscal and monetary stimulus in Canada and around the world. Markets were trending on anticipations of a blue sweep in the U.S., and had priced in a Democratic win for both the presidency and the Senate. Joe notes that markets tend to do better, however, when Republicans hold the Senate and the government is split. Value stocks had been gaining traction while tech companies stumbled, but once the Democratic presidential win was confirmed, this reversed, with tech trending back upward and value stocks declining.

Recorded on November 10, 2020.

Jurrien Timmer, Director of Global Macro, provides his weekly market commentary and global macro update. Jurrien notes that the economy has recovered by about 70% now, but COVID-19 cases are still on the rise. He believes we need either a bridge from policy makers, through fiscal relief, or encouraging news on COVID-19, with cases falling or else headway on a vaccine. Following the past week’s election, Jurrien notes that over the past 100 years, there have only been two times that Democrats were in office but did not control the Senate and Congress. He thinks this situation could in fact be beneficial for Joe Biden, because it will give him an opportunity to work with Republicans, and things will still get done; the measures taken just may not be as extreme as they would have been without Republican Senate control. We are in an era when there needs to be more coordination between fiscal and monetary policy. Given where debt levels and demographics are, and how hard it is to grow out of a hard debt burden, fiscal and monetary authorities need to coordinate policies. Follow Jurrien on LinkedIn or @TimmerFidelity on Twitter for his detailed research reports and charts.

Recorded on November 9, 2020.

In the 9th episode of the Fidelity ETF Exchange - powered by FidelityConnects, co-hosts Étienne Joncas Bouchard and Katrina Wilson take a deep dive into Value Factor ETFs. This is the third of a five part series called Factors in Focus. Over the course of the coming weeks, Etienne and Katrina will offer their outlook on various investment factors, describe how they have performed in the past, and most importantly how advisors and investors can incorporate them into their portfolios.

Recorded on November 7, 2020

Portfolio manager David Tulk discusses how the results of the U.S. election could affect global markets and portfolio positioning. In the context of positioning, David notes that Canada and emerging markets have some similarities – both are higher-beta regions, for instance – but emerging markets arguably offer more “bang for your buck,” and are better growth environments. An anticipated lower U.S. dollar could also make emerging markets more favourable in a portfolio. David believes currency works as an asset class in the 60/40 portfolio. Given where yields are, there isn’t much coupon income. He notes that bonds can only rally so far with low interest rates, and the low-interest-rate environment is expected to stay for a while. Gold has a correlation to real interest rates, and real interest rates are likely to remain low. David thinks gold can serve as a good hedge against the inflation risk associated with currency. 

Recorded on November 5, 2020.

Veteran investment director Tom Stevenson from Fidelity International shares his thoughts on a variety of topics including the impact of COVID-19 in Europe, the volatility onto the European market, Brexit, the Euro, and the importance of ESG. As the pandemic continues in Europe, Tom believes the UK might impose a national lockdown as regional lockdowns are not helping to flatten the curve. He points out that the UK is around two to three weeks behind the rest of Europe in terms of Covid cases, restrictions, and responses. The Euro has been strong as of late due to the shift towards a more unified fiscal framework within Europe.  Weakness in the U.S. dollar reflects a rise in the Euro, but this might change with the challenging economic environment. And there was a very sharp rally in GDP in the third quarter, but the market isn’t reflecting the positive news because it has factored in the expectation that fourth quarter GDP will not look as good. A V-shape recovery is very unlikely Tom says, and he believes the shape might be more erratic.

Recorded on October 30, 2020.

Portfolio manager and highly sought-after expert Mark Schmehl discusses his distinctive approach to investing and his market outlook. Mark believes that the U.S. election will be a non-event from the stock market’s point of view, and he doesn’t believe that the policies on either side will affect the market very much. He believes that investing in fundamentals and strong companies is the only way to invest; if you make decisions based on the outcome of the election, you could be making a big mistake. He does, however, think that the U.S. market needs more stimulus, as the coronavirus continues to affect the economy. Mark notes that tech has had a great run, especially large-cap tech and stocks are still not that expensive given the durability of earnings. From a valuation standpoint, he doesn’t think there appears to be a tech bubble, and he doesn’t expect any regulation that will affect big tech stocks. 

Recorded on November 2, 2020.

Jurrien Timmer, Director of Global Macro, and Denise Chisholm, sector strategist, discuss the outcome of the U.S. election. As America is still counting votes, the market has been rallying in the days surrounding the election. But, markets were down the week before the election, which Jurrien thinks is a mix of bad timing with a big rise in COVID-19 cases, at the same time as a failed materialization of Fiscal stimulus. In addition to looking at the US election, Jurrien and Denise remind us to stay focused on the long term.

Recorded on November 4, 2020.

Legendary portfolio manager Will Danoff discusses his outlook for the U.S. and global markets. For Canadian investors, Will manages Fidelity Insights Class. This year, Will reaches three decades of managing Fidelity Contrafund, the largest U.S. mutual fund run by a single manager. Over the last thirty years, Will has seen it all; he believes companies do well over time if they can adapt and rebound.  One thing that has amazed Will this year is the concern and care from management teams about the health and safety of their customers and employees. He believes that if you can keep customers and employees safe, productivity will continue, and this in turn will have a positive result for shareholders. Last time Will joined FidelityConnects, he spoke about the challenges ahead for airlines, hotels and aviation companies – and those challenges continue. On the other hand, he believes there are clear winners of the pandemic. Technology and software companies are benefiting from the rush to move to online, and some retailers are investing heavily to improve their online channels, ability to accept multiple forms of payment, inventory management, etc. Many of Will’s bigger positions in Fidelity Insights Class are technology and software companies that are big enablers of e-commerce.

Recorded on October 28, 2020.

Today is the big day; America chooses a president for the next 4 years, and depending on how the die is cast a different (or the same) permutation of the White House, the Senate, and the House of Representatives can be at play. How will markets react? What are the probable scenarios we could be looking at? What happens according to the Constitution and other laws in the event of an elongated battle, and during the in-between from today to January?  Portfolio manager Jeff Moore and Fidelity’s political expert Greg Lowman join us to dissect where the markets may go from here, and what investors should be paying attention to.

Recorded on November 3, 2020.