David Tulk, portfolio manager on Fidelity’s Global Asset Allocation (GAA) team, says the GAA team’s current investment approach is to look through the volatility and estimate what the markets will look like after COVID-19. They are still being cautious and investing selectively, analyzing both the policy response and the effects of COVID-19. The team adheres to a philosophy that balances equities and fixed income. The Canadian market could potentially see a more gradual and volatile economic recovery than other regions. David notes that this is one of the reasons the GAA team is currently less invested in, or “underweight,” Canadian equities. David also believes that high yield is an asset class in which investors will benefit from having a portfolio manager actively select securities, rather than passively tracking an index. An index might not capture pockets of value that may emerge outside of the energy sector, because indexes tend to be more invested in, or “overweight,” the energy sector. A defensive asset class the GAA team is focusing on is gold, which also picks up on other economic factors as a result of the pandemic, such as an increase in inflation.

Recorded on April 29, 2020.