FidelityConnects

Portfolio manager Ramona Persaud analyzes the current market trends and opportunities driven by the global economic reboot. Ramona likes to think with a long-term investment horizon, and believes that being extremely tactical today can create a lot of value for investors in the long term. Even though we’re in a muted valuation scenario, Ramona still believes there is good value in deeply cyclical areas. Many areas that are most affected by the virus (such as financials and consumer discretionary) still face dislocations. For this reason, she owns both quality companies and those which are exhibiting dislocated value. Although the market is signalling that this crisis is a passing situation, like a natural disaster, it hasn’t taken into consideration how we’ll pay for it. Ramona is focusing on the extent this is being implied in valuations. 

Recorded on July 8, 2020.

Institutional portfolio manager Mike Hickey is an integral part of the team behind the Fidelity Insights Class, managed by one of the most well known names in the investing world - Will Danoff. Mike reflects on the year so far, and offers perspectives on how markets could react to recent pandemic news while governments kick-start their economies. Mike attributes the year-to-date performance of Fidelity Insights Class to the high-quality secular growers they owned before the market crash. Looking at health care, with aging demographic trends around the world, and governments embracing corporate health care to help in the fight against COVID-19, Will and Mike see this as an attractive sector in which they will continue to add to holdings. Also, they have held their tech stocks for several years. Mike notes that buying tech companies at high valuations is highly dependent on an investor’s time horizon; he doesn’t believe their competitive advantage is going to break down in the near term. He believes big tech will continue to drive the market, due to its size and scale. Mike also notes that we are in the early stages of an industrial revolution (cloud, massive data centres, machine learning, etc.), and that investors should focus on the long term.

Recorded on July 7, 2020.

Jurrien Timmer, Director of Global Macro, provides his weekly market commentary and global macro update. Jurrien discusses where the markets are going as we enter earnings season, noting that the earnings estimate curve has flattened against an uncertain future. Jurrien also provides a 2020 mid-year recap. So far this year, Jurrien considers the “losers” to be small-cap stocks, value stocks and commodities and, by sector, financials, energy and industrials. The “winners” are long-term government bonds, gold, TIPS and large-cap growth stocks. At a sector level, technology, health care and consumer discretionary have been the front-runners. Jurrien’s analysis of the returns of the S&P 500 Index up to June 30, 2020, shows the Index is at the top of the trend line – meaning it is exactly where it is supposed to be. Until it is proven otherwise, he believes we could be starting another secular bull market, propelled by a need for cash, because of aging demographics, that will drive investors to the cash-yielding equities that have been the market leaders over the past ten years.

Recorded on July 6, 2020.

As Ontario adjusts to Phase 2 of reopening, Hon. Rod Phillips, Minister of Finance, discusses the reopening strategy and where the opportunities are for the economy moving forward. Minister Phillips notes that the direction the economy takes depends on the progress of the virus, as the underlaying uncertainty makes forecasting difficult, but the province’s cautious approach has resulted in a reduction in cases. He also notes the impact is different on certain sectors, such as travel and tourism. Minister Phillips and host Pamela Ritchie also discuss capital markets modernization, the housing market, and supply chain and trade, including how relationships between provinces have been strengthened during this time thanks to collaboration to manage the containment of the virus.

Recorded on June 30, 2020.

As economies reopen, portfolio manager Steve Buller discusses what this means for global real estate as we head into the second half of 2020. Steve manages Fidelity Global Real Estate Fund, and notes that the reopening of the economy has been very positive for the sector: most kinds of real estate are places where people gather, so the relaxing of quarantines has brought benefits. Apart from the retail sector and hotels, good rent collection statistics are still seen in most sectors around the world. Retail, hotel and some office space sectors have been hit the hardest by defaults on rent payments. Reflecting on e-commerce trends, Steve sees that e-commerce has been taking away from retail real estate every year, and he believes COVID-19 has accelerated this trend by about two years. Customers appreciate the ease of e-commerce and may not go back to brick-and-mortar stores once they have reopened.

Recorded on June 26, 2020.

Portfolio manager Don Newman explores the key trends in dividend investing as countries look toward lifting lockdown restrictions and companies seek to return their balance sheets to pre-crisis levels. In Don’s opinion, the 45% run-up on the S&P 500 Index had a few key drivers, such as optimism related to reopening the economy, and the monetary policy response from central banks. For example, the Federal Reserve added about $3 trillion to its balance sheet in order to provide liquidity to the market, and to push people into risk assets. It was also driven by fiscal stimulus of about $200 billion in Canada, which helped stabilize consumer spending. Don is looking for companies with less-than-optimal leverage on their balance sheets, that won’t spend the next couple of years paying off debt and that can continue to grow, as well as companies with sustainable dividends that will continue to trade at premiums. Don believes share buybacks will be off the table for several companies for some time, because it doesn’t look good to lay off workers and then buy back stock. He believes dividends may replace buybacks over the next couple of years.

Recorded on June 25, 2020.

As investors brace for the possibility of a second wave of coronavirus infections and a slowed global recovery, portfolio manager Ayesha Akbar shares her market outlook. Ayesha, portfolio manager of Fidelity Global Asset Allocation Fund, keeps to a neutral allocation that has a heavier weighting in equities (65% equities, 30% fixed income and 5% cash). Ayesha addresses the trends she is seeing and how she is allocating in global asset classes amidst volatile markets. One trend is that she doesn’t think value stocks have been a great area to invest in over the past ten years, and has preferred growth stocks. For value to outperform, the yield curve would need to steepen again, and yield curve controls will be needed (something we may in fact see the Federal Reserve apply in the U.S.). Nevertheless, she does think it is good to have some value exposure in a portfolio as a means of diversification.

Recorded on June 24, 2020.

In the third episode of the Fidelity ETF Exchange - powered by FidelityConnects, co-hosts Mike Riccio and Etienne Bouchard speak with Andrew Clee, VP, ETFs, about thematic investing in ETFs. Thematic investing is an investment approach that looks to invest in global mega-trends that could possibly shape the world in the future. Andrew, Mike and Etienne discuss the best and the worst of thematic investing, covering everything from technology to socially responsible investing, as well as the advantages of strategically adding this long-term investment approach to a portfolio.

Recorded on June 24, 2020.

Fidelity tax and regulatory experts Peter Bowen and Michelle Munro discuss the impact of the coronavirus pandemic on retirement planning and the key findings for investors in Fidelity’s 2020 retirement report. For 15 years now, Fidelity Investments Canada has delivered the Fidelity Retirement Survey Report, with the goal of helping financial advisors better understand the latest trends, so they can successfully guide their clients through their retirement journey. This year’s report features exclusive insights on the impact of COVID-19 on retirement planning, and also leverages 15 years of retirement data to directly compare the impact of COVID-19 on retirement against the impact of the 2008-2009 financial crisis. Many investors are worried about their financial situation, creating a swing in results that isn’t normally seen year-over-year. The biggest swing was seen among pre-retirees, with 40% saying they feel negatively about retirement. This was the highest percentage since the survey debuted in 2014. Many people have lost their jobs and are worried about their future finances. Michelle believes this drives home the importance of working with a financial advisor. Peter notes that people who have a plan tend to feel more prepared (financially, socially, emotionally and even physically), but only 22% of pre-retirees indicated that they have a written financial plan.

For a copy of this years report, please visit https://go.fidelity.ca/retirementsurvey

Recorded on June 23, 2020.

Portfolio manager Jed Weiss looks at the global industries and sectors primed for recovery as economies reopen for business. For Canadian investors, Jed manages Fidelity International Growth Fund, an equity offering that invests primarily in opportunities outside of North America. Jed invests in companies that he believes will benefit from multi-year structural growth and high barriers to entry and that are trading at attractive valuations. COVID-19 created a lot of new opportunities and Jed explains how he was able to deploy incremental capital into companies that fit into three categories: companies which were once too highly priced, companies that have resilient business models and it didn’t make sense that they were down, and businesses that got better as a result of the crisis, but stock was down.

Recorded on June 19, 2020.