U.S. Equity Sector 2018 Outlook - Best Ideas from Fidelity's Sector Leaders - Fidelity Institutional Asset Management
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
U.S. Equity Sector 2018 Outlook Best Ideas from Fidelity’s Sector Leaders
People and Resources: The Keys to Fidelity Equity Sector Leadership Fidelity Investments was founded on the belief that it is possible to research and identify companies that can outperform their peers, and that by investing in better-performing companies, we can achieve better returns for investors. That premise is foundational for our equity sector leaders, who recognize that not every stock within each sector is positioned to deliver better-than-expected earnings growth or stock- price-multiple expansion. What matters most is trying to identify those individual companies that appear best-positioned to “win” over time. That is why we champion a fundamental company-by-company approach to investing, backed by the vast capabilities of a global research team following nearly 2,300 companies worldwide. In a perpetually evolving investment landscape, our global equity research capabilities—consisting of dedicated people, a global perspective, and modern technology tools—remain critical to being current and proactive in making investment decisions. Each day, our investment teams meet with companies and evaluate their current businesses and future prospects. We do this by visiting management teams at manufacturing plants, biotechnology labs, and shale-drilling sites, among other locations. In addition, dozens of companies visit our multiple office locations in North America, Europe, and Asia on a daily basis. To ensure that our research insights can be shared, and acted upon, as quickly as possible across Fidelity’s global investment team, we maintain state-of-the-art technology and communication tools. For some perspective on our research-driven approach, we recently asked our sector portfolio managers to share one of their highest-conviction investing ideas for the coming year. We hope you find these insights valuable as you think about equity sector investing opportunities in 2018 and beyond. Sincerely, Tim Cohen Head of Global Equity Research Fidelity Investments
Fidelity sector portfolio managers provide their perspectives on
disruptors and subsequent investment opportunities in 2018.
Consumer Discretionary 4 Information Technology 16
Katie Shaw Charlie Chai
Consumer Staples 6 Materials 18
James McElligott Rick Malnight
Energy 8 Real Estate 20
John Dowd Steven Buller l Samuel Wald
Financials 10 Telecommunication Services 22
Christopher Lee Matthew Drukker
Health Care 12 Utilities 24
Edward Yoon Douglas Simmons
Industrials 14
Tobias WeloLEADERSHIP SERIES U.S. EQUITY SECTOR 2018 OUTLOOK
Consumer Discretionary
Consumers appear to increasingly favor experiences over things
Katie Shaw l Sector Portfolio Manager
Technology has changed the consumer landscape in to share photos instantly and frequently are creating trip
so many ways—particularly for retailers and media envy, and are fueling consumers’ desire to share similar
companies. But one aspect of consumer nature has not experiences and tell the world about them, too. As such,
changed: our desire for experiences and sharing them. In I believe social media firms should provide investment
fact, consumer spending has undergone a striking shift opportunities over the next year, as consumers continue
over the past several decades, as people appear more to search for and share travel, sports, and leisure.
reluctant to open their wallets for tangible discretionary Overall, my view is that companies that can bring
goods, including clothing and footwear. consumers something special relating to travel (hotels and
Spending on durable goods, such as household equipment, time-shares, for example) and experiences (such as skiing
home furnishings, automobiles, and auto parts, has also
declined as a percentage of total personal consumption EXHIBIT 1: Consumer spending on goods has declined, while
spending on experience-related categories has increased.
expenditures (PCE). Instead, we’ve seen a marked increase
Spending as a Percentage of PCE
in purchases of accommodations, recreation, and other
Casino Gambling Gasoline & Other Energy
experience-related products and services (Exhibit 1). This
Clothing/Footwear Hotels & Motels
trend is likely to continue through 2018 and beyond, and 9%
Food Services Motor Vehicles & Parts
companies that can deliver unique travel and experiences Furnishings Recreation Services
8% & Household
to consumers stand to benefit most. Equipment
Among other specific indicators, the percentage of 7%
households planning vacations has grown sharply in the 6%
past year, while cruise lines, recreational vehicles, and
5%
other categories related to recreation and leisure have
recently notched high consumer-sentiment scores.
4%
Social media as a powerful driver of 3%
spending habits
2%
The prevalence of social media—especially among
millennials—is a major driver of this trend toward 1%
experiences. Social media users are just one click away
from seeing pictures and videos of their family and 0%
1960
1962
1965
1967
1970
1972
1975
1977
1980
1982
1985
1987
1990
1992
1995
1997
2000
2002
2005
2007
2010
2012
2015
2017
friends hiking Machu Picchu, attending a music festival,
or participating in a road race. The increased time
PCE: personal consumption expenditures. Source: Bureau of Economic
consumers spend on social media and their inclination Analysis, as of Sep. 30, 2017.
4U.S. EQUITY SECTOR 2018 OUTLOOK: CONSUMER DISCRETIONARY
and gambling) are best positioned to benefit from this Author
trend in 2018 and beyond. I’m also positive on cruise lines, Katie Shaw, CFA l Sector Portfolio Manager
which I believe are another strong play on the expanding Katie Shaw is a sector portfolio manager for Fidelity Investments.
desire to travel. In addition, similar types of companies Ms. Shaw, a CFA charterholder, joined Fidelity in 2008 as an
in select countries around the globe—particularly equity research analyst, and has managed multiple consumer
discretionary sector and industry portfolios.
China—stand to benefit from an increase in outbound
travel. Increasing margins as well as return of cash to
shareholders and valuation should remain attractive
components for many of these stocks over the next year.
The consumer discretionary industries can be significantly affected by the performance of the overall economy, interest rates, competition, consumer
confidence and spending, and changes in demographics and consumer tastes.
5LEADERSHIP SERIES U.S. EQUITY SECTOR 2018 OUTLOOK
Consumer Staples
Emerging markets present significant opportunities for multinationals
James McElligott l Sector Portfolio Manager
Consumer staples are what many of us consider essential contrast, consumption in emerging markets is a little
products, such as toothpaste, shampoo, laundry detergent, more than half that. Moreover, the average annual
and packaged foods. Many staples companies are growth rate for toothpaste sales in emerging markets
multinational, with some garnering 60% of their sales fell to about 7% in 2015 and 2016, down from about
from emerging markets, home to roughly six billion of the 11% between 2010 and 2014.1 In the next 10 to 20 years,
estimated 7.2 billion people in the world. A burgeoning toothpaste consumption in emerging markets could rival
middle class and faster population growth than in that of developed markets, and sales growth could return
developed markets make these countries attractive end to previous levels. If consumption rises to these levels,
markets for large multinational staples companies in 2018 we could see a mid-single-digit annual gain in emerging-
and beyond. market toothpaste sales volumes over time, which—
along with price increases—could drive high-single- to
Signs of a turnaround in emerging markets low-double-digit revenue growth in the category.
Staples companies saw a dramatic slowdown in
EXHIBIT 1: The long-term growth opportunity for sales of
emerging-market sales growth in 2015 and 2016, as toothpaste and other consumer staples in emerging markets
a strong U.S. dollar forced multinational companies appears strong.
to raise prices. In 2017, sales growth trends began to Toothpaste Usage Per Capita (ml/day)
improve, as economic growth in many emerging markets 1.4
stabilized. Currency headwinds also subsided, as the
1.2 Developed Market Avg.: 1.07
U.S. dollar returned to a more benign level. Many staples
companies reported improved emerging-market sales 1
growth for the third quarter. This improvement suggests
0.8
that the cycle may be turning and that we may see sales Emerging
Market Avg.: 0.57
growth return to levels last seen from 2010 through 2014, 0.6
supporting what Fidelity’s global research team has
0.4
heard anecdotally from the companies we’ve met with
and seen in local markets. 0.2
Quantifying the opportunity 0
Canada
U.S.
Italy
France
Switzerland
Netherlands
U.K.
China
S. Africa
Indonesia
Russia
India
Japan
Germany
Brazil
Mexico
The long-term growth opportunity in emerging markets
appears strong across many staples categories. Take
toothpaste, as an example. In developed markets, the
average per capita consumption of toothpaste is 1.07 Usage data is population weighted. Source: Bernstein, as of Dec. 31, 2016.
milliliters per day (Exhibit 1), roughly the equivalent of
people brushing their teeth once a day on average. By
6U.S. EQUITY SECTOR 2018 OUTLOOK: CONSUMER STAPLES
Focus on multinational staples companies Author
Staples companies with sizable emerging-market exposure James McElligott l Sector Portfolio Manager
may offer some of the sector’s strongest earnings-growth James McElligott is a portfolio manager and research analyst for
prospects. Multinational companies look particularly Fidelity Investments. He currently oversees several consumer
staples sector portfolios and subportfolios. He joined Fidelity
attractive because they offer a mix of geographic and Investments in 2003.
product diversification and, over time, can often gain
market share over local businesses. Multinationals that can
successfully adapt to local preferences—whether putting
natural ingredients in toothpaste in India or strong scents
in laundry detergent in Mexico—are likely to be among
the biggest long-term winners.
Endnotes
1
Source: Bernstein, as of Dec. 31, 2016.
The consumer staples industries can be significantly affected by demographic and product trends, competitive pricing, food fads, marketing campaigns,
environmental factors, government regulation, the performance of the overall economy, interest rates, and consumer confidence.
7LEADERSHIP SERIES U.S. EQUITY SECTOR 2018 OUTLOOK
Energy
U.S.-based exploration and production companies remain the
sector’s sweet spot
John Dowd l Sector Portfolio Manager
With many energy companies around the world facing based on our estimates. Many of these companies con-
profitability challenges due to crude oil prices hovering in tinue to benefit from strategic land ownership near fertile
a $45-$55 range for much of 2017, I continue to maintain basins, improving well efficiency and productivity, and by
conviction in certain higher-quality, U.S.-based explora- maintaining little or no debt. These are real competitive
tion and production companies (E&Ps). These companies advantages in an environment of lower commodity prices.
have adjusted their cost structures to reflect the lower Conversely, the growth of U.S. shale oil production and
commodity price environment and now have the ability the decline in global crude oil prices during the past few
to self-fund material production growth. Importantly, this years has put considerable pressure on the profitability
ability of the U.S. to increase volumes puts the profitabili- of some companies, particularly foreign E&P producers
ty of many international energy producers at risk. Looking that drill offshore. Many foreign E&P companies cannot
out into 2018, I continue to believe those E&Ps that have produce oil profitably when it is priced near $40 a barrel
embraced new, disruptive technology offer a compelling
EXHIBIT 1: E&P stocks have been trading at a discount
combination of risk and earnings growth potential.
to the stocks of large integrated oil companies (IOCs)
Two deflationary forces within the energy sector have despite new technology, improved cost structures, and
production growth.
driven down commodity prices, but may benefit U.S.-
Relative Valuation of E&Ps vs. Integrated Oil Companies
based E&P companies. First, the ease with which U.S. (2005-2017)
energy companies have been able to raise capital has led E&Ps vs. IOCs: Enterprise Value/Production Ratio
to increased oil production capacity within the industry 1.5
E&Ps valued higher than IOCs
and lower oil prices around the world. Second, improved 1.4
well productivity via new shale-fracturing technology has
1.3
allowed U.S. E&Ps to increase production growth and
1.2
achieve profits even as crude oil prices have declined well
1.1
below their most recent cyclical peaks. U.S. shale produc-
1
tion represents only 5% of the world’s supply of crude oil,
0.9
but that rate of production, if altered, can influence the
0.8
price of crude oil given the tight balance of global supply
0.7
and demand.
E&Ps valued lower than IOCs
0.6
Several U.S. E&P companies have demonstrated the abil-
0.5
ity to grow oil production at half the commodity price of
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
just a few years ago. Companies operating in the Perm-
ian (Texas) basin, for example, have the ability to boost Source: Bloomberg FInance, L.P., Fidelity Investments, as of Nov. 17, 2017.
production at 20% per year for the foreseeable future,
8U.S. EQUITY SECTOR 2018 OUTLOOK: ENERGY
or less. The Organization for Oil Exporting Countries cost positions, production growth, and return prospects
(OPEC), a group of foreign countries that collaborate than their foreign peers. This strategy wasn’t rewarded
to manage their collective exportation of crude oil, has during the first three quarters of 2017, as E&P stocks
seen annual net export revenues fall from a peak of $1.18 underperformed the broader energy sector. Importantly,
billion in 2012 to $433 million in 2016. Looking into 2018, this underperformance was due to multiple compression
I do believe there are some factors that could provide rather than sub-par cash-flow growth. I remain optimistic
support for oil prices to remain at the upper end of its that this group will outperform other areas within the
recent range or even move higher, but I am not optimistic sector over a longer time horizon.
that crude oil prices will recover to historical peak levels.
In addition, the market has been valuing some U.S.-based
E&P companies as if commodity prices will remain low in Author
perpetuity, and also as if they will not achieve production John Dowd l Sector Portfolio Manager
growth going forward (see Exhibit 1). I see that as an op- John Dowd is a portfolio manager for Fidelity Investments. Mr.
portunity. Overall, given these industry dynamics, I have Dowd currently manages energy sector portfolios and subport-
folios. He joined Fidelity in 2005 as an equity research analyst.
been allocating capital to the U.S. E&P stocks with better
The energy industries can be significantly affected by fluctuations in energy prices and supply and demand of energy fuels, energy conservation, the success
of exploration projects, and taxes and government regulations.
The commodities industries can be significantly affected by commodity prices, world events, import controls, worldwide competition, government regulations,
and economic conditions.
9LEADERSHIP SERIES U.S. EQUITY SECTOR 2018 OUTLOOK
Financials
Regulatory relief may boost bank earnings
Christopher Lee l Sector Portfolio Manager
Driving gains through less regulation has included quantitative and qualitative components,
In the wake of the 2007–08 global financial crisis, U.S. and the opaque nature of the qualitative portion has
legislators passed many new rules for financial institutions. caused banks to err toward conservative capital-allocation
A decade later, we may be headed in the opposite policies. New regulators could make the qualitative
direction, with regulatory rollbacks that could have a test more transparent or less stringent, or even drop it
positive impact on the sector—and on big banks, in entirely. Any of these scenarios would give the banks
particular. Investors have largely overlooked this potential more latitude to put their capital to the best possible use,
shift due to skepticism over President Trump’s ability to potentially leading to better returns for investors.
advance his pro-growth agenda. But it may be time to
The potential upside
take another look.
Although no one knows exactly how the regulatory land-
The most comprehensive recent legislation to govern the
scape will unfold in 2018, rollbacks seem likely. Estimates
sector was the 2010 Dodd–Frank Wall Street Reform and
Consumer Protection Act for bank oversight. It imposed
EXHIBIT 1: U.S. banks have increased their capital signifi-
an annual stress test to determine if banks have adequate cantly since the financial crisis, which has hurt returns on
capital to withstand severe financial or economic stress, equity, but regulatory rollbacks could reverse that trend.
U.S. Banks’ Equity as a Percentage of Assets
and restricted banks from trading for their own accounts.
12%
While helping to stabilize the financial system, Dodd–
Frank has also significantly increased the costs of compli- 11%
ance and regulatory reporting and has pushed banks to
hold much higher levels of capital (Exhibit 1). The capital 10%
build, in turn, has hurt returns on equity—a big driver of
valuations. In addition, the legislation has caused in- 9%
vestment banks to shy away from risk, inhibiting trading
8%
activity and market liquidity.
7%
Avenues for relief
Moving forward, newly appointed pro-growth, pro- 6%
business regulators seem likely to take a lighter touch
in interpreting these rules, essentially loosening the 5%
1950 1956 1962 1968 1974 1980 1986 1992 1998 2004 2010 Jun.
constraints on banks. Consider the stress test: the law 2017
only mandates that the test takes place annually; it Source: Federal Deposit Insurance Company, as of Jun. 30, 2017.
doesn’t spell out the particulars. To date, the stress test
10U.S. EQUITY SECTOR 2018 OUTLOOK: FINANCIALS
are that big banks with more than $50 billion in assets— Author
which have seen a disproportionate share of the incre- Christopher Lee l Sector Portfolio Manager
mental regulations—could be among the biggest bene- Christopher Lee is a portfolio manager and research analyst for
ficiaries, with an estimated 5% to 15% boost in earnings. Fidelity Investments. He currently manages several financials
Regional banks, which have tried not to exceed the oner- sector portfolios and subportfolios. Mr. Lee is responsible for
covering global investment bank and universal bank stocks
ous $50 billion threshold, could become more interested within the financials sector. He joined Fidelity in 2004.
in mergers and acquisitions (M&A), and investment banks
could benefit from increased trading activity. Within the
sector, stocks with valuations that are not factoring in the
potential benefits of regulatory relief could provide some
of the strongest opportunities for future appreciation.
Sector specialist Michael Griffith, CFA, also contributed to this report.
The financials industries are subject to extensive government regulation, can be subject to relatively rapid change due to increasingly blurred distinctions
between service segments, and can be significantly affected by availability and cost of capital funds, changes in interest rates, the rate of corporate and
consumer debt defaults, and price competition.
11LEADERSHIP SERIES U.S. EQUITY SECTOR 2018 OUTLOOK
Health Care
Mounting costs have led to consumerism, and favor
tech-enabled health care
Edward Yoon l Sector Portfolio Manager
Looking ahead to 2018 and beyond, the biggest trend and help them navigate a very complex, yet highly person-
I’m watching is the emergence of new technologies al area of their lives.
being used by health care companies to offer a more Elsewhere, innovative technologies in the form of med-
consumer-friendly approach to care. Companies are ical devices are not only bringing down the costs of
turning to technology-enabled services to improve health care for businesses and consumers, but also mak-
efficiency and to modernize their business models, with ing procedures more reproducible with fewer unwanted
a focus on proficient care coordination, overall cost side effects. For example, image-guided assistance and
reduction, and improved interoperability—the extent robots are being used for major procedures, in place of
to which systems and devices can exchange data, and more-invasive surgeries. Devices that continuously moni-
interpret that shared information. tor a diabetic’s blood sugar can cut down on or eliminate
The major impetus for this trend is the rising cost of the need for finger pricking, which can help patients
health care. Over the past two decades, health insurance
EXHIBIT 1: As consumers now bear more of the burden of
premiums have risen at a staggering pace. With more health care costs, the sector is in the midst of a transition
companies choosing to offer high-deductible health plans, toward becoming more consumer-focused.
Cumulative Increase in Insurance Premiums vs. Earnings
the burden of paying for health care is increasingly falling
on the consumer (Exhibit 1). Patients are being asked to 250%
Workers’ Contribution to Family Premiums
221%
make more informed decisions about care, and providers Health Insurance Premiums for Family Coverage
are faced with a changing system that encourages high- Workers’ Earnings
200%
quality clinical outcomes over greater utilization, and Overall Inflation
203%
rewards providers for both effectiveness and efficiency. 158%
Health care companies are increasingly using tech-enabled 150%
services to help meet these new demands. 138%
Tech-enabled health care in action 100%
88%
I believe we’re in the early stages of health care consumer-
75% 56%
ism, but we’re already seeing the adoption of tech-enabled 42%
50%
services, providing a host of investment implications. For 20% 42%
example, companies are beginning to use mobile apps to 31%
17%
help consumers better understand and use their benefits, 0%
1999 2003 2007 2011 2015
interact with care teams, and aggregate their clinical infor-
mation. This trend should increase consumers’ health IQs Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits,
1999–2015, Bureau of Labor Statistics, as of Dec. 31, 2015.
12U.S. EQUITY SECTOR 2018 OUTLOOK: HEALTH CARE
more effectively manage a potentially costly chronic newer services may take time for many consumers, but
condition. Telemedicine business models also are on the adoption has already begun. I’ll continue to keep my
rise. Patients can engage in clinical interactions by phone, eye on companies that can help consumers make more
video chat, or alternative web applications, instead of at informed health care decisions and drive down costs.
the doctor’s office. Further, I believe genetics will funda-
mentally change our understanding of disease, and con-
sumers are just beginning to see the benefits of research
in this space, with more to come in the near future. Author
Going forward, I expect the way consumers interact with Edward Yoon l Sector Portfolio Manager
the health care system will continue to evolve, with the Edward Yoon is a portfolio manager and research analyst for
Fidelity Investments. Mr. Yoon is responsible for coverage of
demand for tech-enabled services increasing along with health care equipment and supplies stocks, and serves as the
the sector’s focus on consumer value. Shifting to these health care sector leader.
The health care industries are subject to government regulation and reimbursement rates, as well as government approval of products and services, which
could have a significant effect on price and availability, and can be significantly affected by rapid obsolescence and patent expirations.
13LEADERSHIP SERIES U.S. EQUITY SECTOR 2018 OUTLOOK
Industrials
Digital transformation of the industrials sector holds
long-term promise
Tobias Welo l Sector Portfolio Manager
Even though artificial intelligence (AI)—the ability of ma- tion processes and make adjustments in real time. The
chines to perform tasks with human-like intelligence—is Internet of Things, improved software and algorithms,
a product of the information technology sector, many of data analytics, and advanced electronics all have con-
the key applications to date are in industrials. Essential- tributed to AI’s usefulness through its ability to perform
ly, any process that can be automated can potentially in semi- and unstructured environments, and the “intelli-
be improved with AI, and many of the most promising gence” to learn and operate autonomously. Thus, we see
applications are found in a variety of manufacturing envi- increasingly widespread use of industrial robots—that
ronments. Whether the product is a medical device, a toy, is, physical robots that execute tasks in manufacturing,
smart lighting, or aircraft engines, the goal is to produce agriculture, construction, and similar industries with heavy,
more and better-quality products at a lower cost, with industrial-scale workloads. Some industries, such as auto
shorter downtimes. manufacturing, have used robots for years but have only
These benefits can be obtained through the use of scratched the surface of the potential for AI-equipped
“smart” equipment that can monitor data about produc- robots (see Exhibit 1).
EXHIBIT 1: The use of digital “smart” technologies is becoming more common among several businesses within the
industrials sector.
The Digital Industrial Internet Transformation
Digital Data
and Analytics Industrial Internet of Things Software Platforms
Layer 4
Enabling
Technologies Sensors, Connectivity (Internet, Cellular), Metering, Battery Density, 3D Printers
Layer 3
Physical
Equipment Smart-Enabled Equipment Examples: Pumps, Valves, Robots, Lighting Fixtures, Jet Engines, Medical Devices
Layer 2
Growth
Verticals
Layer 1 Automation Energy Smart Cities Electric Additive
Efficiency Vehicles Manufacturing
Key Drivers Increased Productivity Shorter Downtimes Decreased Congestion & Pollution
of Change Improved Quality & Reliability Lower Lifecycle Costs Tightening Regulations & Compliance
Layer 0 Reduced Labor Costs Predictive Maintenance Mobility & Visualization
Source: Fidelity Investments, as of Dec. 1, 2017.
14U.S. EQUITY SECTOR 2018 OUTLOOK: INDUSTRIALS
Similarly, in the water and electrical industries, hard- While the adoption of AI remains in its infancy, areas that
ware manufacturers are expanding their offerings of have high and fast return on investments such as light-
software-enabled products, as municipalities increasingly ing, robots, and energy efficiency are experiencing rapid
look to replace their existing infrastructure with solu- growth and are high-conviction areas for investment
tions that leverage sensors and internet communication. today. I think AI represents a potential long-term growth
“Smart” networks, data, and analytics could enable towns driver for the sector, where its presence and significance
and cities to benefit from greater energy efficiency, re- will widen significantly in the medium term.
duced costs, and real-time monitoring.
Manufacturers of home and office environmental-
Author
control equipment are following a similar path. In “smart”
Tobias Welo l Sector Portfolio Manager
houses, heating and cooling systems will use predictive
Tobias Welo is a portfolio manager and research analyst for
analytics—the use of new and historical information Fidelity Investments. Mr. Welo, who joined Fidelity in 2005, is
to forecast future activity, behavior, and trends—to responsible for managing multiple portfolios focused on the
industrials and materials sectors. He also serves as sector leader
anticipate what temperature and humidity users prefer in
for the industrials and materials sectors.
specific circumstances.
Industrials industries can be significantly affected by general economic trends, changes in consumer sentiment and spending, commodity prices, legislation,
government regulation and spending, import controls, and worldwide competition, and can be subject to liability for environmental damage, depletion of
resources, and mandated expenditures for safety and pollution control.
15LEADERSHIP SERIES U.S. EQUITY SECTOR 2018 OUTLOOK
Information Technology
3D-sensing smartphone applications—a potential game-changer
Charlie Chai l Sector Portfolio Manager
As recently as 12 to 18 months ago, I was fairly negative On the home-improvement front, furniture maker IKEA
on investment opportunities tied to the smartphone recently unveiled an app that uses AR to allow users to
market because I thought it had become saturated. In scan a room and then place representations of IKEA
retrospect, that was mainly because manufacturers had furniture in the resulting 3D image. Eventually, I think
seemingly “hit a wall” with respect to new blockbuster 3D sensing could be incorporated into automobiles to
features. With the introduction of 3D sensing in Apple’s enable autonomous driving. Even the popular pastime of
iPhone X model—which began shipping in the fourth taking “selfies” should get a boost, as smartphones’ 3D
quarter of 2017—I believe that has changed. capabilities will automatically correct for the “proximetry
The iPhone X is not the first smartphone to incorpo- effect,” the distortion that makes your nose look larger
rate 3D sensing, a technology that can scan real-world and your face look squeezed in these photos.
objects, such as a person, object or room, and render
those 3D images on a screen. However, what makes the
iPhone X a game-changer, in my view, is the built-in hard- EXHIBIT 1: Sales revenue from smartphones with 3D sensing
is forecast to grow significantly in the coming years.
ware and software that supports 3D applications such as Revenue from Smartphones with 3D-Sensing Capability
Face ID, Apple’s new facial-recognition technology. For (2016-2021)
example, the iPhone X contains Apple’s A11 Bionic chip, $Billion
within which is a neural engine capable of processing 600 $20
billion operations per second. This additional technology
Base Bull Bear
improves the accuracy of Face ID, making it a distinct
improvement over Touch ID, the fingerprint-recognition $15
system that Face ID is replacing.
Apple is a leader in 3D-sensing technology for now. How-
ever, I expect other companies to catch up in the next $10
several years. More interesting, in my opinion, is what
this 3D-sensing technology does and the opportunity
that it presents. 3D applications have already surfaced $5
on the gaming front, and I expect these to multiply as
the technology advances. One example is the Nintendo/
Niantic smartphone game Pokemon Go, which employs $0
AR (augmented reality), the ability to incorporate graph- 2016 2017E 2018E 2019E 2020E 2021E
ics into real-world images.
E: estimated revenue. Source: Bernstein, as of Nov. 1, 2017.
16U.S. EQUITY SECTOR 2018 OUTLOOK: INFORMATION TECHNOLOGY
I see Apple as a driver of innovation, but I believe invest- Author
ments in certain component manufacturers may offer Charlie Chai, CFA l Sector Portfolio Manager
compelling growth opportunities going forward. These Charlie Chai is a sector portfolio manager for Fidelity Invest-
are the companies that make the camera lenses, sensors, ments. Mr. Chai, a CFA charterholder, joined Fidelity in 1997
speakers, illuminators, microphones and other prod- as an equity research analyst, and he has managed multiple
technology-related sector and industry portfolios since 2003.
ucts required for smartphone operation, and the use of
features such as 3D sensing. I believe the best-positioned
component makers represent attractive investment
opportunities in the coming year, regardless of which
company ultimately wins the smartphone race.
The technology industries can be significantly affected by obsolescence of existing technology, short product cycles, falling prices and profits, competition
from new market entrants, and general economic condition.
17LEADERSHIP SERIES U.S. EQUITY SECTOR 2018 OUTLOOK
Materials
Agricultural stocks appear ripe for picking
Rick Malnight l Sector Portfolio Manager
Although the agricultural markets have been in bear With that said, long-term demand for various kinds of
territory for several years and the prices of corn, wheat, protein is in a projected uptrend (see Exhibit 1), while
and soybeans all stand near multiyear lows, the risk/re- the supply of arable land continues to fall (see Exhibit 2).
ward outlook for a number of agricultural-related stocks This long-term agricultural supply-demand profile bodes
appears quite positive. well for crop prices, and potentially for the profitability
In recent years, favorable weather conditions have kept and stock prices of certain companies. Further, although
crop yields and inventories high, putting pressure on weather has been cooperative for farmers lately, all it
commodity prices. In addition, advancements in seed takes is one disruptive weather event in one major grow-
technology from companies such as Monsanto and Dow- ing region to make a significant dent in that year’s yields
DuPont have led to a roughly 1% annual improvement and send crop prices soaring. Due to the unpredictability
in crop yields.1 Lower crop prices, in turn, have kept a lid of weather conditions and the fact that these markets can
on the prices of seeds, crop-protection chemicals, and turn very quickly, there’s often little time to build a posi-
fertilizers, with corresponding weakness in the stock pric- tion if an investor waits until conditions are favorable.
es of the companies making these items. Sentiment on Another long-term positive factor, in my view, is that ma-
the group has been negative for quite a while, and most jor industry players appear to be bullish. This is evident in
stock valuation measures we follow are near the lower the number of large mergers and acquisitions that
end of their long-term ranges.
EXHIBIT 1: Demand for protein-based food has been EXHIBIT 2: The world’s supply of land that could be used for
increasing around the world and is expected to increase farming has been declining over time.
going forward. Farmland Supply: Arable Land Around the World
Protein Intake Per Capita in Developed and Developing
1.20
Countries (2002-2026)
Africa Asia North America World
90
Cereals Meat Dairy Fish Other 1.00
80
70
0.80
60
50 0.60
40
30 0.40
20
0.20
10
0
0.00
2002-04 2012-14 2026E 2002-04 2012-14 2026E
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2014
*Developing Countries Developed Countries
E: estimated consumption. *Represents developing countries excluding least World Bank, as of Dec. 31, 2014.
developed countries as defined by OECD. The category “other” includes sugar,
vegetable oil, eggs, roots, and tubers. Sugar and vegetable oil represent
negligible shares of total protein consumption. Vegetables, fruits, pulses, and
other food items are not included in this figure. Source: Organization for
Economic Co-operation and Development (OECD), Dec. 31, 2015.
18U.S. EQUITY SECTOR 2018 OUTLOOK: MATERIALS
have occurred lately. In the seed and crop-protection firms have spent $91 billion over the past decade pur-
chemicals categories, we’ve seen a merger between chasing nearly 300 foreign companies involved in agricul-
Dow Chemical and DuPont—which closed at the end of ture, chemicals, and food, according to deal-tracking firm
August—as well as the announced acquisition of Monsan- Dealogic. The acquisitions are part of the nation’s plan to
to by Germany-based Bayer that is expected to close in improve its ability to feed its population of nearly
early 2018. Elsewhere, Potash Corporation of Saskatch- 1.4 billion.2
ewan is planning to join with Agrium, combining two Given these developments, I remain optimistic that the in-
Canada-based makers of fertilizer. This deal is expected vestment prospects for higher-quality agricultural-related
to close in the next few months. stocks over the next several years are quite compelling.
China has also been an active buyer of ag-related compa-
nies. Over the summer, state-owned ChemChina finalized
Author
its purchase of Syngenta, a Swiss maker of pesticides and
Rick Malnight l Sector Portfolio Manager
seeds. The $44 billion deal was China’s biggest foreign
Rick Malnight is a portfolio manager and research analyst for
takeover of all time. Around the same time, Dow Chem-
Fidelity Investments. Mr. Malnight, who joined Fidelity in 2007,
ical announced that an agriculture fund backed by the is responsible for managing multiple portfolios focused on the
Chinese government would pay $1.1 billion for its Bra- materials sectors.
zilian corn seed and research business. Overall, Chinese
Endnotes
1
Fidelity Investments, as of Dec. 1, 2017.
2
http://money.cnn.com/2017/07/13/news/china-food-seeds-agriculture/index.html
Materials industries can be significantly affected by the level and volatility of commodity prices, the exchange value of the dollar, import controls, worldwide
competition, liability for environmental damage, depletion of resources, and mandated expenditures for safety and pollution control.
19LEADERSHIP SERIES U.S. EQUITY SECTOR 2018 OUTLOOK
Real Estate
Undervalued retail REITs that are expected to survive the
competitive threat posed by online retailers look attractive
Steven Buller l Sector Portfolio Manager
Samuel Wald l Sector Portfolio Manager
It’s no secret that the growth of online retailing during centers have increasingly been prioritizing experiences
the past decade has captured market share from and over buying “things.” This includes securing leases with
shifted retail spending patterns among American con- experience-based tenants such as restaurants, movie
sumers. This trend has not only put pressure on sales theaters and other entertainment venues that are far less
and profits for some retailers, but dampened sentiment vulnerable to online sales competition.
and performance for retail real estate investment trusts Certain REITs are also able to benefit from another trend
(REITs)—the publicly traded entities that own retail shop- in the marketplace—predominantly online business-
ping malls and strip mall centers. es (such as Amazon.com, Warby Parker and Bonobos,
However, we believe certain retail REITs have advantages among others) that have started opening physical stores
that will allow them to remain viable and grow amid this to showcase their products and provide hands-on expe-
increasingly competitive environment, even as the market riences for customers. It’s another way in which certain
recently has been uniformly punishing the stocks of all retail REITs are adapting to the changing landscape.
but a handful of them.
EXHIBIT 1: U.S. year-over-year sales growth among retail
In particular, we have been focusing on retail REITs stores has remained positive since the last economic reces-
with property ownership in prime locations—those sion in 2009.
U.S. Brick & Mortar Store Retail Sales Growth (2003-2016)
near dense and affluent populations. In these locations,
in-store shopping traffic and sales growth generally has % year-over-year sales growth
been growing steadily in recent years. Over the long- 8.0%
term, we believe REITs that have been focused on main- 6.0%
taining and enhancing their real estate portfolios in these
4.0%
types of premier locations represent attractive long-term
investments. At the same time, we have been avoiding 2.0%
REITs with properties concentrated in less-populous, 0.0%
less-affluent locations, as these strike us as especially
-2.0%
vulnerable to weak productivity and store closings.
-4.0%
Our view is that brick-and-mortar retail real estate is not
going away. Sales growth among brick-and-mortar retail -6.0%
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
stores has been positive every year since 2009, and was
up 2.0% year-over-year in 2016 (see Exhibit 1). Retail real Data excludes auto and gasoline retail store sales. Source: U.S. Census
estate has been changing to reflect new shopping and Bureau, as of Dec. 31, 2016.
entertainment trends. Successful malls and shopping
20U.S. EQUITY SECTOR 2018 OUTLOOK: REAL ESTATE
Meanwhile, we believe the weakened sentiment for retail of tenants; and that are trading at undeservedly cheap
REITs in general has been overly punitive for many of the valuations due to investors’ skepticism about the future of
better-positioned companies. Depressed valuations for brick-and-mortar retail.
certain retail REIT stocks provide attractive opportunities
Authors
going into 2018, as we look to distinguish between the
Steven Buller l Sector Portfolio Manager
potential “winners” and “losers” in the marketplace.
Steven Buller is a portfolio manager at Fidelity Investments. He
While our portfolios have generally been underweighted currently manages several portfolios that invest in REITs and
in retail REITs relative to their respective benchmarks, we other real estate securities, for both U.S. and foreign investors.
have been prioritizing those we believe are positioned
Samuel Wald l Sector Portfolio Manager
well to address the competitive threat of e-commerce.
Samuel Wald is a portfolio manager at Fidelity Investments. He
Our focus: retail REITs that own the highest-quality, currently manages several portfolios and subportfolios that
best-located properties; that are attracting the right mix invest in REITs and other real estate securities.
Andrew Rubin, an institutional portfolio manager who is a member of the REIT equity and high income real estate debt teams, also contributed to this article.
A REIT issues securities that trade like stock on the major exchanges, and invests in real estate directly, either through properties or mortgages. A REIT is
required to invest at least 75% of total assets in real estate and distribute 90% of its taxable income to investors. 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. Illiquidity is an inherent risk associated with investing in real estate and REITs. There is no guarantee the issuer of a REIT will maintain the secondary
market for its shares, and redemptions may be at a price which is more or less than the original price paid.
Changes in real estate values or economic downturns can have a significant negative effect on issuers in the real estate industry. Because of its narrow focus,
sector investing tends to be more volatile than investments that diversify across many sectors and companies. Sector investing is also subject to the additional
risks associated with its particular industry.
21LEADERSHIP SERIES U.S. EQUITY SECTOR 2018 OUTLOOK
Telecommunication Services
Cable companies stand to benefit from broadband growth
Matthew Drukker l Sector Portfolio Manager
Tremendous growth in broadband consumption continues demanding higher speeds. In most markets, cable compa-
unabated and remains a key trend for the telecommu- nies are advertising the fastest internet speeds, and many
nication services sector. Globally, mobile-data traffic is households are switching to cable or are willing to pay for a
growing by more than 50% per year and wireline traffic higher-speed tier. Collectively, cable is capturing the entire
is increasing by about 20%. The biggest driver of this
1
broadband subscriber share (Exhibit 1). But despite having
increase has been internet video, which is becoming main- a superior product and a market that is increasingly coming
stream. Telecom giant Verizon Wireless recently shared to them, cable companies have less than 50% penetration
that its network carries as much traffic in one hour as it did of serviceable customers. As such, cable companies have a
in an entire week just 10 years ago—close to a 170-fold in- runway to win share and maintain pricing power, in offering
crease. But while usage continues to skyrocket, companies high-speed internet service to sustainably grow revenue
are still trying to figure out how to profit from this trend. and free cash flow, especially since the barriers to entry are
I estimate video to account for about two-thirds of the high and competition is weak.
traffic on wireline networks, including cable, while less Beyond market-share gains in broadband, cable companies
than half of traffic is coming through on wireless networks.
EXHIBIT 1: Cable companies have been capturing all new
Overall, as demand for broadband and higher-speed
broadband subscriptions.
internet access rises, active investors have an opportunity Share of Households Adding Broadband
to identify companies that can monetize this trend. As 140%
such, I am looking for ways to capitalize on increased Cable % of Net Adds
120%
adoption of broadband services and the proliferation of Telco % of Net Adds
mobile data globally, which includes considering not only 100%
stocks that are within the telecommunication services 80%
sectors, but also those related to the telecom industry.
60%
Cable companies represent one of the communications
40%
services segments that are benefiting from the uptick in
broadband usage and growth. Certain cable companies 20%
have produced better growth simply due to their limited 0%
number of competitors and their ability to differentiate
-20%
themselves. In most markets, there are just two
-40%
competitors, which enables these companies to segment
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
customers into different pricing tiers based on service level,
and gives them the opportunity to capture market share.
Telco: telecommunication services. Data represents a basket of cable and
As customers spend more time on the internet, they are telco companies. Source: company reports, as of Dec. 31, 2016.
22U.S. EQUITY SECTOR 2018 OUTLOOK: TELECOMMUNICATION SERVICES
may also have a better chance of capitalizing on growth ate themselves and maintain flexibility in pricing, and the
in online video consumption with usage-based pricing. If opportunity to harness long-term revenue growth and
done properly, usage-based pricing could more than offset increase free cash flow, both drivers of valuation growth.
headwinds from paid-TV cord-cutting—the consumer trend
toward opting out of more expensive cable plans in favor of
streaming services such as Netflix, Amazon Prime, and Hulu.
Online streaming services require high-speed internet, and Author
cable faces little competition in this area. As more viewing Matthew Drukker l Sector Portfolio Manager
migrates online, on-demand cable offerings could be- Matthew Drukker is a portfolio manager and research analyst for
Fidelity Investments. Mr. Drukker joined Fidelity in 2008 and is
come the default aggregators of video content. This edge responsible for managing multiple sector and industry portfolios
could offer cable companies yet another way to differenti- related to telecommunications and multimedia.
Endnotes
1
Source: Cisco, VNI Forecast Highlights Tool, as of Dec. 31, 2016.
The telecommunication services industries are subject to government regulation of rates of return and services that may be offered, and can be significantly
affected by intense competition.
23LEADERSHIP SERIES U.S. EQUITY SECTOR 2018 OUTLOOK
Utilities
Higher power prices are supportive of better-than-expected
earnings and cash flow for power companies
Douglas Simmons l Sector Portfolio Manager
For much of the past decade, U.S. power supply increas- Nowhere is this trend more apparent than in Texas, one
ingly exceeded demand, putting downward pressure on of the two major power pools in the U.S., where the Elec-
power prices across the country and threatening the eco- tric Reliability Council of Texas (ERCOT) manages the flow
nomic viability of power plants in deregulated markets. of electric power to 24 million customers, representing
Beginning in 2018 and projecting beyond, the power 90% of the state’s electric load. Texas is one of the few
industry’s supply-and-demand profile is likely to change, power markets with substantial power-demand growth,
especially in places such as Texas—driving better pricing due to above-average economic and industrial growth,
power as old power plants retire and demand continues driven mainly from energy and chemical companies
to grow. This dynamic should generally lead to improved with operations along the Gulf of Mexico. At the same
earnings and better-than-expected cash flow for surviv- time, due to the economic pressures from the resulting
ing power generation companies. power oversupply, new combined-cycle gas turbine
During the past decade, reserve margins—the (CCGT) plants—which use a gas and steam turbine—
additional power capacity available to meet demand EXHIBIT 1: As power capacity declines in Texas, the gap
during high-demand periods—were amply supplied. between peak load and capacity is expected to close, which
Peak power load, the amount of electricity required to should support increased power prices.
Peak Power Load vs. Power Capacity in Texas
prevent a wide-scale power outage, generally exceed- (2014–forecasted 2021)
ed the standard 15% rate. While some coal-powered
90,000
plants were closed due to stricter federal environmental Peak Load Capacity
80,000
standards aimed at reducing air pollutants, new gas-
70,000
fired power plants and an increase in renewable energy
sources (e.g., wind power production) largely offset the 60,000
reduction in coal-fired power capacity. As a result, the 50,000
U.S. power market remained well oversupplied, and 40,000
power prices fell into a multiyear decline from 2008 until
30,000
hitting bottom in 2016.
20,000
More recently, there have been signs that supply-and-de-
10,000
mand conditions within the U.S. power markets have
begun to shift. Lower power prices have driven down the 2014 2015 2016 2017 2018E 2019E 2020E 2021E
profit margins for coal and nuclear plants to the point
E: estimate. Peak Power Load: a metric for demand; the amount of electricity
where more plants have closed, some new power plants required to prevent a wide-scale power outage. Power Capacity: amount of
electricity available to meet demand. Source: Report on the Capacity,
have struggled economically, and the planned produc- Demand and Reserves (CDR) in the ERCOT Region (2017-2026), as of Dec.
15, 2016, ERCOT.com.
tion of other new gas-fired plants has come to a halt.
24U.S. EQUITY SECTOR 2018 OUTLOOK: UTILITIES
have been put on hold, and coal- and gas-fired plants are expect other markets will quickly follow, benefiting those
being retired.* surviving power generation companies that exhibit solid
In sum, these plant closings are accelerating supply business fundamentals.
rationalization in Texas, solidifying our conviction that
not only will power supply and demand tighten in 2018 Author
and beyond, but this contraction will occur more quickly Douglas Simmons l Sector Portfolio Manager
than the market is anticipating (see Exhibit 1). Further, if Douglas Simmons is a portfolio manager for Fidelity Invest-
there is severe weather in the summer, combined with ments. Mr. Simmons currently manages several utilities sector
portfolios and subportfolios, and serves as co-manager of
outages—such as extended heat waves that stress older
diversified equity portfolios. Mr. Simmons joined Fidelity in
plants—that gap could tighten even faster. As Texas 2003, covering the environmental sector, as well as electric and
regains a more balanced supply-and-demand ratio, we gas utilities.
The utilities industries can be significantly affected by government regulation, financing difficulties, supply and demand for services or fuel, and natural
resource conservation.
* For example, in a surprising move in mid-October, Texas-based Vistra Energy, the state’s largest provider of electricity and natural gas, announced
the retirement of two coal-fired plants, taking 2,300 mega-watts (MW) of coal capacity off-line, citing a lack of economic viability for these plants. This
announcement came just one week after the company stated it was closing its three-unit 1,800-MW coal plant. In Texas’s market of 81,000MW in supply,
these decisions resulted in 5% of the state’s power supply being removed in just two weeks. Vistra also has plans to close additional plants by 2020, due to
marginal economics, inefficiency and/or high pollution levels—all helping to narrow the power supply and demand gap and bolster the company’s bottom line.
25Unless otherwise disclosed to you, any investment or management recommendation in this document is not meant to be impartial investment advice or advice in a fiduciary capacity, is intended to be educational, and is not tailored to the investment needs of any specific individual. Fidelity and its representatives have a financial interest in any investment alternatives or transactions described in this document. Fidelity receives compensation from Fidelity funds and products, certain third-party funds and products, and certain investment services. The compensation that is received, either directly or indirectly, by Fidelity may vary based on such funds, products, and services, which can create a conflict of interest for Fidelity and its representatives. Fiduciaries are solely responsible for exercising independent judgment in evaluating any transaction(s) and are assumed to be capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies. Views expressed are as of Dec. 1, 2017, based on the information available at that time, and may change based on market and other conditions. Unless otherwise noted, the opinions provided are those of the author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information. References to specific securities or investment themes are for illustrative purposes only and should not be construed as recommendations or investment advice. This information must not be relied upon in making any investment decision. Fidelity cannot be held responsible for any type of loss incurred by applying any of the information presented. These views must not be relied upon as an indication of trading intent of any Fidelity fund or Fidelity advisor. Investment decisions should be based on an individual’s own goals, time horizon, and tolerance for risk. This piece may contain assumptions that are “forward-looking statements,” which are based on certain assumptions of future events. Actual events are difficult to predict and may differ from those assumed. There can be no assurance that forward-looking statements will materialize or that actual returns or results will not be materially different from those described here. Past performance and dividend rates are historical and do not guarantee future results. Diversification and asset allocation do not ensure a profit or guarantee against loss. Investing involves risk, including risk of loss. Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments.Foreign markets can be more volatile than U.S. markets due to increased risks of adverse issuer, political, market or economic developments, all of which are magnified in emerging markets. These risks are particularly significant for funds that focus on a single country or region. Because of its narrow focus, sector investing tends to be more volatile than investments that diversify across many sectors and companies. Sector investing is also subject to the additional risks associated with its particular industry. It is not possible to invest directly in an index. All indexes are unmanaged. Index definitions The S&P 500® Index is a market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance. S&P 500 is a registered service mark of The McGraw-Hill Companies, Inc., and has been licensed for use by Fidelity Distributors Corporation and its affiliates. The S&P 500® Sector Indices include the standard GICS® sectors that make up the S&P 500® Index. The market capitalization of all 10 S&P 500® Sector Indices together composes the market capitalization of the parent S&P 500® Index; all members of the S&P 500® Index are assigned to one (and only one) sector. The S&P Composite 1500® and its sub-indices combine three leading indices, the S&P 500 ®, the S&P MidCap 400 ®, and the S&P SmallCap 600 ® to cover approximately 90% of the U.S. market capitalization. It is designed for investors seeking to replicate the performance of the U.S. equity market or benchmark against a representative universe of tradable stocks. The Russell 1000® Index is a market capitalization-weighted index representing the largest 1000 stocks of publicly traded companies in the Russell 3000 ® Index. FTSE National Association of Real Estate Investment Trusts (NAREIT) All Equity REITs Index is a market capitalization-weighted index that is designed to measure the performance of all tax-qualified REITs listed on the NYSE, the American Stock Exchange, or the NASDAQ National Market List. The Cisco® Global Cloud Index (GCI) is an ongoing effort to forecast the growth of global data center and cloud-based IP traffic. The forecast includes trends associated with data center virtualization and cloud computing. The CRB BLS Spot Market Price Index tracks 22 commodities presumed to be among the first influenced by changes in economic conditions. Glossary Price-to-earnings ratio: the market price per share of a stock (or group of stocks) divided by a company’s earnings per share. M1: a measure of the most liquid portions of a country’s money supply. Third-party marks are the property of their respective owners; all other marks are the property of FMR LLC. The Chartered Financial Analyst (CFA) designation is offered by the CFA Institute. To obtain the CFA charter, candidates must pass three exams demonstrating their competence, integrity, and extensive knowledge in accounting, ethical and professional standards, economics, portfolio management, and security analysis, and must also have at least four years of qualifying work experience, among other requirements. If receiving this piece through your relationship with Fidelity Institutional Asset Management ® (FIAM), this publication may be provided by Fidelity Invest- ments Institutional Services Company, Inc., Fidelity Institutional Asset Management Trust Company, or FIAM LLC, depending on your relationship. If receiving this piece through your relationship with Fidelity Personal & Workplace Investing (PWI) or Fidelity Family Office Services (FFOS), this publication is provided through Fidelity Brokerage Services LLC, Member NYSE, SIPC. If receiving this piece through your relationship with Fidelity Clearing & Custody Solutions® or Fidelity Capital Markets, this publication is for institutional investor or investment professional use only. Clearing, custody, or other brokerage services are provided through National Financial Services LLC or Fidelity Brokerage Services LLC, Members NYSE, SIPC. ©2017 FMR LLC. All rights reserved. 818829.1.1
You can also read
