Fidelity Investments® Releases 2014 Global Investment Outlook for 10 Major Equity Sectors

Fidelity Experts Provide Annual Breakdown of Equity Sectors: U.S. Housing Recovery Driving Potential Returns, While U.S. Fiscal and Monetary Policies Remain Top Macroeconomic Risks

BOSTON--()--Fidelity Investments®, a leading global asset management firm with $1.9 trillion in managed assets, today released its annual investment outlook for the industry’s 10 major equity sectors. In the new report, Fidelity’s sector portfolio managers share their perspectives on the top global and U.S. domestic investment opportunities and risks to expect in 2014.

Several of the investment themes highlighted in Fidelity’s outlook cut across multiple sectors, including the ongoing recovery in the U.S. housing and non-residential construction markets, the growing middle-class populations and rising wealth in emerging markets, isolated but improved economic indicators in Europe, and various macroeconomic trends.

“The positive performance of the U.S. equity market in 2013 has been underpinned by compelling returns in all 10 sectors with nine out of 10 generating positive earnings growth1,” said Chris Bartel, senior vice president, Global Equity Research at Fidelity Investments. “As our team of sector investment professionals looks to 2014, they are closely monitoring industry and company-specific fundamentals as solid revenue growth, healthy margins and shareholder-friendly capital deployment are the key to continued earnings growth. We expect the 2014 insights to help investors capitalize on opportunities and manage risk as many of them conduct an annual portfolio review.”

The following table highlights some of these risks and opportunities (click the below links for the full thought leadership paper and investment insights).

Sector

        Potential Investment Opportunities         Potential Investment Risks

Consumer
Discretionary

       
  • U.S. housing market recovery
  • Economic stabilization and improvement in Europe
       
  • U.S. fiscal & monetary policies
  • China’s economy

Consumer Staples

       
  • Further penetration in emerging markets
  • Staples companies with pricing power
       
  • Further economic weakness in emerging markets
  • Price wars

Energy

       
  • U.S. crude oil producers with strategic land positioning and low cost structures
       
  • Faster-than-expected crude oil production

Financial Services

       
  • Continued penetration of electronic payments
  • Regulatory arbitrage
       
  • U.S. monetary policy: unwinding QE
  • Slowing economic growth in emerging markets

Health Care

       
  • The innovation cycle
  • Outcome-based heath care
  • Health care “consumerism”
       
  • Uncertainty about U.S. health care reform

Industrials

       
  • U.S. construction
  • Secular theme: energy efficiency
  • Global economic improvement
       
  • Continued defense budget cuts

Information
Technology

       
  • Mobile messaging as a popular platform
  • A continued shift toward cloud computing
       
  • Semiconductor supply difficult to predict
  • Macroeconomic concerns

Materials

       
  • Growing demand for construction materials
  • Spin-offs instead of M&A
       
  • Ag. chemicals hit cyclical lows amid long-term growth
  • Global macro, but company-specific micro

Telecommunications

       
  • Wireless competition heats up
  • Data takes over the wires
       
  • Long-term decline for traditional wireline operators

Utilities

       
  • Positioned to benefit from growing demand for natural gas
       
  • Sharp increase in interest rates
               

Fidelity, which has more than 30 years of global sector investing experience, currently offers 44 actively-managed sector mutual funds with more than $60 billion in assets2, the industry’s largest lineup of sector mutual funds.3 In addition, Fidelity recently introduced 10 passive sector ETFs to complement its active sector fund line-up, providing investors with more choice. Fidelity also offers a wealth of sector investing resources such as online learning modules, portfolio tools and timely sector investment perspectives -- all on fidelity.com and advisor.fidelity.com, including:

  • The Sector Portfolio Builder tool, which allows investors to build and model hypothetical sector-based portfolios, as well as compare the historical performance and risk of those portfolios to benchmark indices.
  • A series of educational sessions within the Fidelity Learning Center on fidelity.com, where investors can take sector-specific courses, read articles and participate in webinars.

About Fidelity Investments

Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $4.5 trillion, including managed assets of $1.9 trillion, as of November 30, 2013. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.

Before investing in any mutual fund or exchange-traded fund, you should consider its investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus, offering circular or, if available, a summary prospectus containing this information. Read it carefully.

Fidelity Sector Portfolio Builder is an educational tool and you should not rely on it as the primary basis for investment, financial or tax planning decisions.

Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the loss of principal.

A sector fund may have additional volatility because it can invest a significant portion of assets in securities of a small number of individual issuers. Each sector fund is also subject to the additional risks associated with its particular industry.

Non-diversified funds that focus on a relatively small number of stocks/issuers tend to be more volatile than diversified funds and the market as a whole.

ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses. Unlike mutual funds, ETF shares are bought and sold at market price, which may be higher or lower than their NAV, and are not individually redeemed from the fund.

Fidelity Brokerage Services LLC, Member NYSE, SIPC
900 Salem Street, Smithfield, RI 02917

Fidelity Investments Institutional Services Company, Inc.,
500 Salem Street, Smithfield, RI 02917

674343.1.0

© 2013 FMR LLC. All rights reserved.

1 Year-to-date performance through October 31, 2013. Sector returns represented by S&P 500 sectors, and defined by Global Industry Classification Standard (GICS®). All sector equity returns include reinvestment of dividends and interest income. Past performance is no guarantee of future results. Source: FactSet, Fidelity Investments.
2 As of November 30, 2013.
3 Morningstar Direct as of Oct. 8, 2013.

Contacts

Fidelity Investments
Nicole Goodnow, 617-563-3785
nicole.goodnow@fmr.com
or
Fidelity Corporate Communications
617-563-5800
fidelitycorporateaffairs@fmr.com

Release Summary

Fidelity’s sector portfolio managers share their perspectives on top investment opportunities and risks to expect in 2014.

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Contacts

Fidelity Investments
Nicole Goodnow, 617-563-3785
nicole.goodnow@fmr.com
or
Fidelity Corporate Communications
617-563-5800
fidelitycorporateaffairs@fmr.com