Fidelity Sector InvestigatorSM Helps Financial Advisors Leverage Cyclical and Sector Exposure More Effectively

Calculator Helps Advisors Better Position Equity Portfolios By Taking Advantage of Potential Sector Performance Opportunities; Fidelity Research Shows Sectors Have Had Higher Return Differentials than Style and Size

BOSTON--()--Fidelity Investments® today introduced the Fidelity Sector InvestigatorSM, an interactive calculator that leverages proprietary Fidelity research to help financial advisors build more effective equity portfolios through potential sector performance opportunities.

Launched by Fidelity Financial Advisor Solutions, the Fidelity unit that provides mutual funds and other products to financial advisors, the Fidelity Sector Investigator is part of a strategy to help advisors with critical portfolio construction decisions. The calculator allows financial advisors to explore different scenarios in the business cycle, enabling them to quantify the actionable trade-offs they face when leveraging sector exposure in portfolio construction. Fidelity research found that sectors accounted for 22 percent of the return differentials across U.S. stocks, more than style (13 percent) or size (4 percent) combined.1 In addition, the changing phases of the business cycle typically coincide with shifts in potential equity sector earnings. As such, advisors can help improve model portfolios through cyclical tilts that leverage these shifts.

While it does not predict or make any projections about the future business cycle or any particular investment, the Fidelity Sector Investigator helps advisors:

  • Investigate the assumptions and evaluate the outlook for the U.S. business cycle over time horizons ranging from one to 10 years
  • Examine the cyclical outlook embedded in their current mix of U.S. equity managers
  • Build a hypothetical total return outlook for each equity sector over selected time horizons
  • Explore portfolio implications of targeted risk/return levels, and of overweighting or underweighting sectors compared to a market benchmark.

Research showed that during the mid-cycle, the macro-environment is typically characterized by modest inflation, a neutral monetary policy, strong credit growth and solid profit growth among businesses. In this phase of the business cycle, economically sensitive sectors such as industrials and technology have tended to outperform the equity market, while defensive sectors such as utilities typically have tended to underperform.

“When making decisions on equity investments, many advisors look at the market cap profile of their investment mix, as well as growth and value factors,” said Robert Litle, senior vice president, Fidelity Financial Advisor Solutions. “Many overlook their sector mix, even though it has been a large driver of equity performance.

“Unlike market cap and growth and value factors, sectors offer consistent classifications and performance drivers,” Litle added. “Because companies in the same sector are alike, they tend to have similar sales and profit drivers and often react similarly to changes in the economy. The Fidelity Sector Investigator helps advisors add value for their clients by taking advantage of the large performance dispersion between the best and worst performing sectors at any point in the business cycle.”

The Fidelity Sector Investigator builds on Fidelity’s depth of perspectives and solutions in helping advisors with portfolio construction. Last year, Fidelity Financial Advisor Solutions introduced a dedicated Portfolio Construction Guidance team, which includes strategists and quantitative specialists who partner with Fidelity’s wholesalers to help advisors resolve challenging portfolio tradeoffs. In February 2014, the team launched a first-of-its-kind2 Fidelity Yield InvestigatorSM calculator to help financial advisors quantify the trade-offs in bond investing. Since its launch, nearly 1,900 advisors have accessed the calculator. Together, the Fidelity Sector Investigator and the Fidelity Yield Investigator make rigorous portfolio construction analytics available at no cost, enabling financial advisors to test portfolios in different hypothetical market environments in a simple, clear and interactive format.

Fidelity also continues to expand its extensive suite of in-depth sector research and market commentary for advisors. The newest investment insights include:

  • Q1 2015 Sector Scorecard: The new report leverages proprietary research from across Fidelity and provides investors a snapshot of the relative performance potential of the 10 market sectors based on five key factors: relative strength, momentum, relative valuations, fundamentals and business cycle. The report reveals that technology stocks continue to appear best-positioned among the 10 sectors.
  • 2015 Annual Equity Sector Outlook: Fidelity’s sector portfolio managers provide their perspective on some of the best sector investing ideas in 2015.
  • State of the Sector - Financials: Chris Lee, financials research sector leader and portfolio manager, provides his view of what lies ahead for companies in the financial sector, including how pent-up consumer demand may sustain the U.S. housing recovery and potentially benefit real estate services companies and banks.

For more information on the Fidelity Sector Investigator, the Fidelity Yield Investigator and sector investing, financial advisors can visit or call their Fidelity representative.

About Fidelity Investments

Fidelity’s goal is to make financial expertise broadly accessible and effective in helping people live the lives they want. With assets under administration of $5.1 trillion, including managed assets of $2.0 trillion as of December 31, 2014, we focus on meeting the unique needs of a diverse set of customers: helping 23 million people investing their own life savings, 20,000 businesses to manage their employee benefit programs, as well as providing 10,000 advisory firms with technology solutions to invest their own clients’ money. Privately held for nearly 70 years, Fidelity employs 41,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit

The Fidelity Sector InvestigatorSM and Fidelity Yield InvestigatorSM are educational calculators made available for investment professional use only. Results are based upon user inputs and historical and current index performance. The calculators do not forecast markets, provide recommendations or project how a certain security or securities may perform. It is not possible to invest directly in an index.

Guidance provided by Fidelity is educational in nature, not individualized, and not intended to serve as the primary or sole basis for your investment or tax-planning decisions. Fidelity does not charge a fee for these services, and information provided should not be construed as investment advice or a recommendation.

Past performance is no guarantee of future results. Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments.

Investments in a particular sector can be more volatile because of their narrow concentration in a specific industry.

The registered trademarks and service marks appearing herein are the property of FMR LLC.

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


© 2015 FMR LLC. All rights reserved.

1   Data represent rolling 12-month analysis of variance (ANOVA) which uses statistical models to attribute the variance of a variable (stock returns in the Russell 3000® Index) to certain factors (sector, style, market cap), for the period 12/31/1990–12/31/2013. The residual is attributed to other company-specific factors. Source: Fidelity Investments as of 12/31/13.
2 Fidelity and third-party competitive intelligence review, January 2014.


Fidelity Investments
Corporate Communications, 617-563-5800
Follow us on Twitter @FidelityNews
Nicole Abbott, 201-915-7548

Release Summary

The Fidelity Sector InvestigatorSM interactive calculator helps advisors better position equity portfolios by taking advantage of potential sector performance opportunities.


Fidelity Investments
Corporate Communications, 617-563-5800
Follow us on Twitter @FidelityNews
Nicole Abbott, 201-915-7548