FidelityConnects

Portfolio manager Kyle Weaver provides an in-depth look at the current state of the market and his outlook for U.S. equities. For Canadian investors, Kyle manages Fidelity U.S. Growth Opportunities Class, and is portfolio co-manager of Fidelity NorthStar® Fund, alongside Joel Tillinghast and Dan Dupont. Kyle is a growth investor who deeply believes in value. He’s finding stocks that are trading at what he thinks will be an extremely low multiple of future earnings in three, five, seven and ten years. Kyle says the shutdown we’ve seen over the last few months has accelerated the secular trends that his Fund had already invested in. As a result, the composition of the Fund today is similar to what it was going into the crisis. Kyle notes that the Fund owns e-commerce names who experienced great dislocation in their stock prices but an acceleration in their prospects. With regard to political developments, Kyle tries to own businesses that he believes will remain strong no matter who is in office. In general, he focuses on models that aren’t dependent on interest rates, gas prices, geopolitics or other unpredictable factors.

Recorded on July 21, 2020.

Fidelity’s Director of Global Macro, Jurrien Timmer, joins us for another global macro and market analysis podcast. Jurrien believes that the combination of monetary and fiscal stimulus puts a floor under the market. 10% of companies have reported earnings and Jurrien believes that an earnings bottom is in place for the second quarter. The market is up 44% compared to lows in March, tracking well against 2009 and most historical bull markets, making this the fastest bear market and fastest bull market recovery. Jurrien believes that the global earnings cycle has shown signs of bottoming with second-quarter being the worst quarter but is still projecting the third-quarter to be negative on a growth rate basis. He notes that he would like to see the dollar go down as evidence that the world is getting enough dollar liquidity. Follow Jurrien on LinkedIn or @TimmerFidelity on Twitter for his detailed research reports and charts.

Recorded on July 20, 2020.

Since last speaking to Andrew Clee and Paul Ma in May, lots has changed, but strategy has not. Andrew, Paul, and host Dave Bushnell talk about the fundamentals of ETF portfolio construction and the pros and cons of different types of portfolios in today’s volatile environment. Paul Ma, VP, Lead Portfolio Strategist at Fidelity Investments, is focusing on strategic secular long-term horizons rather than tactical short-term issues, which he thinks matter less to portfolio construction. He also notes that equities in international markets are currently more attractive, because they have better control over the coronavirus than the U.S. does. Andrew Clee, VP, ETFs at Fidelity Investments Canada, says 2020 has been a great year for ETF flows in the Canadian market, at around $22 billion year-to-date. To put that into perspective, Andrew notes, just $20 billion would be considered good for a whole year. Also, Andrew says that the biggest concern for asset allocation right now is in the fixed income portfolio. With yields much lower than they have been, there is a concern that retirees can’t get the income they need. This pushes them up the risk spectrum.

Recorded on July 17, 2020.

Portfolio manager David Tulk shares his Q3 outlook and provides an update on ongoing market fluctuations and uncertainty. David and the Global Asset Allocation (GAA) team believes diversification is the most important consideration in portfolio construction. David and the GAA team establish holdings that aim to provide a balance of returns and defence. This year, they were pleased with their 60/40 portfolio mix as bonds rallied during the COVID-19 peak and equities rebounded after stimulus was injected. Looking ahead, David thinks global trade may struggle in a post-pandemic world. The GAA team also has concerns that Canada may be adversely impacted, having come into this crisis with high levels of household debt. The slowdown in immigration could also mean a lower growth rate for Canada over the next ten years. To counter this uncertainty, the GAA team has been adding to gold exposure (an out-of-benchmark allocation), because they believe it will help hedge against near-term uncertainty.

Recorded on July 16, 2020.

Andrew Marchese, Chief Investment Officer at Fidelity Canada Asset Management (FCAM), shares his outlook on Canadian and global markets for the second half of 2020. Value has underperformed growth over the past few months and years. Andrew wonders if we will see a change in leadership, but believes that the trend might only reverse with the arrival of a vaccine or treatment for COVID-19, allowing society to go back to normal, without restrictions, and making way for value to make a comeback. If this doesn’t happen, it’s possible we will only see bits and pieces of a “normal” society, with certain sectors reaping the rewards. Andrew notes that the market is looking forward to 2021 and 2022 earnings, and it is paying particularly close attention to COVID-19 treatments and economies reopening, the upcoming U.S. elections, as well as what impact corporate tax rates increasing will do to valuations.

Recorded on July 14, 2020.

In his weekly market update, Jurrien Timmer, Director of Global Macro, explores factors influencing market expectations and reactions. Jurrien explains that the S&P 500 Index has retraced about 87% of the decline – but if you were to price the S&P 500 Index in gold, it would have retraced only about 30% of the decline. Also, Jurrien believes that if the S&P 500 Index reaches new recovery highs, it is extremely important that those new highs be met with broader market participation. Otherwise, a large divergence can occur, which in the past has marked the end of market upswings. If we are in the cyclical bull market Jurrien thinks it is, market participation is one of the most important aspects. Follow Jurrien on LinkedIn or @TimmerFidelity on Twitter for his detailed research reports and charts.

Recorded on July 13, 2020.

Portfolio manager Eileen Dibb provides her outlook for the Asia-Pacific region as fears of a second wave of COVID-19 cases grip markets. Eileen manages Fidelity AsiaStar® Fund and Fidelity Japan Fund, and going into the pandemic, the portfolios were positioned to hold more stable companies in industries with positive trends. Now Eileen is looking for stocks that she believes will perform with or without the virus, and is searching for options such as companies with online solutions that aren’t as likely to be affected by a disruption of brick-and-mortar stores. India is one of Eileen’s favourite places to invest, because she believes it has great long-term potential. However, the short term for India isn’t as promising, because the country wasn’t as strongly positioned going into the virus as other countries. India has lagged in infrastructure capabilities in the past, but if stimulus could be aimed toward infrastructure, the country could see great long-term benefits.

Recorded on July 10, 2020.

In the fourth episode of the Fidelity ETF Exchange - powered by FidelityConnects, co-hosts Mike Riccio and Etienne Bouchard take an in-depth look at the Canadian fixed-income ETF landscape. Fixed-income ETFs have had an outstanding rise in popularity among Canadian investors over the past 15 years, standing at $76.4B in assets under management as of June 2020. Mike and Etienne discuss in detail how advisors and investors can incorporate these ETFs in their portfolios, some of the key trends in the industry as well as a recap of how fixed-income markets have behaved since the beginning of the year.

Recorded on July 6, 2020.

Portfolio manager Max Lemieux provides a sector update as Canadian investors look for signs of a sustained economic recovery. Max manages Fidelity True North Fund, and searches for opportunities in every sector. He notes that it has been interesting to look for businesses that have seen their growth accelerated by the virus. Prior to COVID-19, Max had 5% of his portfolio in cash, and he used it to buy quality companies throughout the volatility. Over the past couple of months, he has been gradually selling off his defensive positions and adding to holdings in names that could benefit from the recovery. On July 8, the Canadian federal government released a report predicting a historic $343 billion deficit for 2020–2021. The last time this high a level of deficit was seen was in the 1940s; Max believes most countries around the world will also be facing these high levels. 

Recorded on July 9, 2020.

Le gestionnaire de portefeuille Maxime Lemieux fournit une mise à jour sectorielle alors que les investisseurs canadiens guettent les signes d’une reprise soutenue de l’économie. M. Lemieux, gestionnaire de portefeuille du Fonds Fidelity Frontière Nord, est à l’affût d’occasions dans chaque secteur. Il souligne qu’il a été fort intéressant de rechercher des entreprises dont la croissance s’est accélérée en raison du virus. Avant la pandémie de COVID-19, M. Lemieux allouait 5 % du portefeuille du Fonds aux liquidités, qu’il a utilisées pour acquérir des sociétés de qualité pendant la période de volatilité. Au cours des derniers mois, il s’est graduellement départi de ses positions défensives pour étoffer ses placements dans les sociétés susceptibles de tirer parti de la reprise. Le 8 juillet, le gouvernement fédéral canadien a publié un rapport selon lequel un déficit record de 343 milliards de dollars est à prévoir pour l’exercice 2020-2021. Un déficit d’une telle ampleur n’a pas été enregistré depuis les années 1940, et M. Lemieux estime que la plupart des pays seront également confrontés à des déficits colossaux. 

Date : 9 juillet 2020