Fidelity Global Investment Grade Bond ETF Series L Trust · NEO:FCIG
Fidelity Global Investment Grade Bond ETF Series L Trust — Fidelity Investments Canada ULC — Fidelity Vision 2023 Toronto
12 slides from Fidelity Global Investment Grade Bond ETF Series L Trust's conference presentation, January 2023
Slide 1: A CIO perspective and market outlook
A CIO perspective and market outlook Andrew Marchese Chief Investment Officer and Portfolio Manager January 2023 1 © 2023 FIDELITY INVESTMENTS CANADA ULC FOR ADVISOR USE ONLY 629627-v2023120
Slide 2: Are we there yet?
Are we there yet? A market’s evolution from a valuation story to a profit story 2 © 2023 FIDELITY INVESTMENTS CANADA ULC FOR ADVISOR USE ONLY 629627-v2023120
Slide 3: Four pillars of the equity market
Four pillars of the equity market Earnings Interest rates Liquidity Valuation Source: Fidelity Investments Canada ULC. 3 © 2023 FIDELITY INVESTMENTS CANADA ULC FOR ADVISOR USE ONLY 629627-v2023120
Slide 4: Executive summary
Executive summary 1 Price movement of risk assets in 2022 was precipitated by rapidly rising inflation expectations, the subsequent rise in interest rates, receding financial system liquidity, rising oil prices and a stronger USD. 2 Price movement of risk assets in 2023 will be predominantly governe
Slide 5: Global economic cycle
Global economic cycle Recession India, Mexico Australia, Brazil, Japan U.S., Canada, Korea + Eurozone Economic growth – Early Mid Late Relative U.K. performance of China* economically sensitive assets Green = Strong The diagram above is a hypothetical illustration of the business cycle, the pattern
Slide 6: Earnings
Earnings Outlook Breadth: % of S&P 500 constituents with positive three month change in annual EPS EPS EPS estimates # of growth # of growth weeks to est. weeks to est. Quarter Jul 2021 Dec 2022 quarter- (actual quarter- (actual end for past end for past quarters) quarters) Breadth 77% 24% Q1/22 – –
Slide 7: Economic activity versus U.S. yield curve
Economic activity versus U.S. housing yield curve 80 4 3,000 3 70 2,500 2 Yield spread (%) 60 2,000 1 Index level 50 0 1,500 -1 40 1,000 -2 30 LHS: ISM Manufactoring PMI 500 -3 RHS: U.S. Treasury 2Y–10Y spread 20 -4 0 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019 Apr-1980 Apr-2003
Slide 8: Market implied policy rates
Market implied policy rates Policy rate Implied policy rate Country/region Jan 3, 2022 Jan 4, 2023 6-month 1-year 2-year 3-year U.S. 0.13% 4.38% 5.01% 4.57% 3.23% 2.99% Canada 0.25% 4.25% 4.58% 4.19% 3.02% 2.66% Eurozone -0.50% 2.00% 3.32% 3.35% 2.68% 2.44% China 2.20% 2.00% 2.43% 2.69% 3.02% 3.24%
Slide 9: Are central banks behind the curve?
Are central banks behind the curve? U.S. monetary policy 8 7 6 Restrictive 5 Restrictive 4 Restrictive R* regression Restrictive 3 model 2.50 2.44 2 0.89 1 Neutral 1.17 0 -1 Accommodative -2 Accommodative -3 Real Fed policy rate -4 Atlanta Fed shadow real FF rate Real FF curve (TIPS forward curve) -
Slide 10: Valuation
Valuation • S&P 500 ~17x NTM EPS represents a modest premium over historic precedent based on current interest rates, current EPS forecasts and a 3% equity risk premium • U.S. small-cap securities presently trading at ~12.5x NTM EPS, versus a historic low of 9.5x in April 2020 • Nominal yields meani
Slide 11: Recap
Recap 1 2023 will require discipline, patience and rigor around profit forecasts and upside/downside scenarios Equity markets have priced in most of the change in central 2 bank policy or change in liquidity, but have not yet fully priced in earnings compression Market levels may obscure transition
Slide 12: Important notice
Important notice For advisor use only. No recipient is authorized to pass this communication on to any other person whatsoever or reproduce it by any means without the prior written consent of Fidelity. Commissions, trailing commissions, management fees, brokerage fees and expenses may be associated
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