FidelityConnects: ETF monthly – Ideas, trends and strategies

[00:03:47] Pamela Ritchie: Hello, and welcome to Fidelity Connects. I'm Pamela Ritchie. Canadian active ETFs are having a moment, reshaping how investors think about diversification, growth and what it means to stay ahead. As we enter the last quarter of this year Canadian equities continue to capture strong inflows. What are the latest market trends shaping the next phase of ETF innovation? Why does our next guest say he prefers a factor-based approach to find the winners in the market? Joining us here today for a discussion on his ETF playbook, including a timely update on Fidelity All-in-Ones, is ETF strategist, Vince Kraljevic. Great to see you, Vince, welcome. How are you?

[00:04:24] Vince Kraljevic: I'm doing fantastic. Thanks again for having me.

[00:04:26] Pamela Ritchie: Delighted to have you here. We'll invite everyone to send their questions in for Vince over the next half hour or so. Let's catch up on the flow story because this is always fascinating. You go month by month, you get to where we're at the end of October, what numbers have you got?

[00:04:38] Vince Kraljevic: Very impressive numbers. 2025...

[00:04:41] Pamela Ritchie: And you've got September.

[00:04:43] Vince Kraljevic: We have September 30. We get it quicker in ETFs than we do in mutual funds. Usually, IFIC or whatever they're called take a bit longer to aggregate that information. With ETFs we usually get the information a lot quicker. 2025, just a gangbuster year, record-breaking year. Every quarter, every month I'm saying, oh, we broke some form of a record. So 2024, net creations or total inflows were $76 billion. At the end of...

[00:05:11] Pamela Ritchie: This is the industry.

[00:05:12] Vince Kraljevic: That was the industry. The industry in 2024, record year, 76 billion. End of September we broke that record. We're $85 billion worth of flows by the end of Q3. We have another quarter of inflows or creations, fingers crossed that we don't go into net redemptions. Probably not, but weirder things have happened. Record-breaking year, and it started off best start to the year, I think March was the best month of the year, September was second best of all time. That's the first half year so just tremendous amount of growth in the industry. One thing, hopefully, we talk about is the All-in-Ones.  That category has been growing exponentially, for a number of reasons I've talked about before, it's over $55 billion approaching ... in the ETF category, that category is almost one-tenth of the entire industry. It went from nothing to now just is following the exact same trendline of balanced mutual funds. First it was equity, then fixed income and now these All-in-Ones or ETFs of ETFs are slowly picking up the pace.

[00:06:16] Pamela Ritchie: This is one big growth story. That is the industry itself in Canada. The Fidelity story within that, there's a top 10 that obviously gets looked at, where are you in that?

[00:06:28] Vince Kraljevic: Based off our current growth rate we will probably be the fourth largest manufacturer by the end of next year. In a year's time we might be the fourth largest ETF manufacturer in Canada. Some of these numbers I've given you before but we'll update them. We had a capture rate of about 11%, year-to-date we're capturing about 15 cents on every dollar that goes into the ETF. Our All-Equity and our Conservative All-in-Ones, they hit a three-year track record in January so we saw a big uptick.

[00:07:10] Pamela Ritchie: This is F-E-Q-T.

[00:07:12] Vince Kraljevic: Yeah, FEQT and FCNS. They were launched a year after our balanced and growth mandate. They hit a three-year track record. In January 5-star Morningstar rated, excellent performance. Then we just saw this hockey stick of growth. I used to say our All-in-Ones capture about 25, now they're capturing about one-third of all flows into that category. Hopefully, the next time I'm on I can say it captures 50%. Fingers crossed but we'll see what happens. Two of those are now in the top 10 of best-selling ETFs in Canada.

[00:07:45] Pamela Ritchie: Okay, well congrats, this is amazing. Let's go just through that three-year, what it means. A lot of things through Fidelity have been launched somewhat recently but they have to get to that three-year mark to sort of get taken in and looked at over a period of time.

[00:07:59] Vince Kraljevic: For a number of reasons, yeah, absolutely. I think we were chatting last time about Morningstar. For Morningstar they usually want a track record and that track record's about three years. Once you get a three-year track record they look at your returns, they look at your volatility, they might look at a few things. I'm not an expert on how ... I don't work for Morningstar so I don't know how they rate. They do their analysis and all of our All-in-Ones, once they hit that three-year track record got a 5-star Morningstar rating. Once you see that it's very impressive for that purpose.

[00:08:30] The other thing is a lot of compliance departments for dealers, they want a three-year track record as well. When you hit this three-year track record it kind of opens everyone's eyes or puts a spotlight on extremely good funds. If you get a 1-star Morning star, usually you don't want to talk about that but if you get a 5-star Morningstar...

[00:08:49] Pamela Ritchie: We're not going to [crosstalk]. That's absolutely not the case. What do you think about those particular funds that has been ... I mean, you talk to people and clients all the time, what they want, what they're looking for. The two funds that are in the top 10, I mean, equity has been the story, there's no question, so I guess that answers that question. Is that why?

[00:09:10] Vince Kraljevic: There's a few things. The reasons that I see our All-in-Ones growing is that it does offer alpha relative to our competitors. We've used a factor-based approach where factors are [indecipherable] that happen that we. Since inception they've outperformed 3 to 4%. We're a bit more expensive but we generate that outperformance. A lot of advisors, and this is why I think the three-year number really matters, compliance approves it, goes on a rec list, and you get the dealers kind of looking at this going like, here are these two products, what's this one doing? We get phone calls, we explain what the process is and we get that uptick. The balanced mandate is one of those, it's an excellent 60/40 portfolio, it fits so many, but the equity sleeve is  ...younger clients that don't have a lot of money so for smaller accounts like the First Time Homebuyers Account or it's TFSAs or things along those lines.

[00:10:08] Pamela Ritchie: They're going equity.

[00:10:09] Vince Kraljevic: They're going all equity. They're 24 years old, they don't need any fixed income. I always make a joke like 40% of your portfolio is in fixed income generating 3 to 4% so for 10 years it's only making 3 or 4. If the stock market is expected to make 7 to 9 you'll be literally losing half of the portfolio. If you're 23, 24, single-ticket solution. A lot of advisors, they're taking on younger clients and they don't have a lot of assets so it's this excellent single-ticket solution for those smaller accounts.

[00:10:35] Pamela Ritchie: Is that really the story, people who are at that age and going to an advisor, or whatever the dealer situation is, and that is who is causing some of this uptick? As a sleeve this is really interesting to investors.

[00:10:51] Vince Kraljevic: We get a lot of data from some of our service providers as well as internally. There was a report done by one of the major banks that says 90% of these solutions are bought by do-it-yourselfers. They just do it just based off of fees and they go, okay, this is great, it's a single-ticket solution, I read somewhere buy an ETF, that's cheap and here you go. Our internal data, last time I spoke with the Head of Product, we're seeing the complete inverse. We're seeing 80 to 90% are being bought by advisors because they're like, well, here are two products but yes, it's 20 basis points more expensive but you're generating X amount more. They're looking at returns net of fees. We're seeing the inverse of what the industry is. Everyone's doing do-it-yourselfers but we're seeing a lot more from advisors doing their due diligence, their know your product requirements. We get a lot of questions as to like how we do it, is it repeatable? We go through the process and we definitely get more uptick from that. We're actually trying to break into the do-it-yourselfers.

[00:11:50] Pamela Ritchie: It sounds like there's a lot of momentum, pardon the pun, there. Let's talk a little bit about the factors that make these very active strategies. This is the way that you look at things. Bobby Barnes sometimes will join Fidelity Connects and talk about where he thinks the factors are going and what they're doing and the strategy there. Just talk about those in building the ETFs.

[00:12:12] Vince Kraljevic: If I repeat myself I apologize. For those that haven't heard this story before, we at Fidelity, when we first launched ETFs we didn't want to launch another passive product. We were not that last, we always see what everyone else is doing and then we bide our time. We speak with advisors as to what they want and they wanted to customize their portfolios. Here's the S&P, here's the TSX but my client wants lower volatility, my client wants this. We at Fidelity have a stable of excellent portfolio managers. I can list 100 of them going back to the 1960s that have outperformed the S&P 500. I was in Florida last week for our VISION event and people were taking photos with some of our portfolio managers. They're like celebrities. We have this excellent stable of portfolio managers and we have an excellent amount of data that we can collect from them. Bobby Barnes is the head of the quant team that I specifically work with. He helped design our ETF platform. Every time I speak with him I learn a very new interesting fact.

[00:13:10] The first one I heard was he was a rocket scientist, worked on the Mars Rover program. Then I heard he was one of the most influential people in designing the Motorola Razr. That was, I think, my second or third cell phone. Then I heard he worked on a top secret military contract with the U.S. military. It turned out to be the beginnings of 5G technology which he has two patents for. I heard something on stage last week. I had a call with Bobby yesterday but I was in the back of an Uver and it felt weird talking so I just listened with my earbuds. I think he was an embedded quant for one of the portfolio managers. I'm going to have to clarify that.

[00:13:48] That's the difference between us and a lot of our competitors that use an academic approach. We have Bobby that worked with PMs and he saw how they were doing it. When we designed our factors we didn't approach it from a textbook says do this because in the real world that doesn't apply because there's trading frictions, there's rotation, there's psychological things that happen. Bobby was influential in designing the first wave of our ETFs. I think it was first dividend then we launched the entire suite of factors. The four that are in the All-in-One are quality, value, low volatility and momentum.

[00:14:23] Pamela Ritchie: All of them have exposure at all times.

[00:14:26] Vince Kraljevic: All times. With our All-in-One suite, and even our regional ETFs, we have the All Equity for Canada, United States and international. Clients came to us saying, we love the All-in-Ones but can you break off the region, so we did that for them. To your point, we just equally weight them. We know that factors work over time not all the time. We don't know which one's going to work. With the U.S. administration making a lot of changes memento is working very well, then low volatility, back to...

[00:14:59] Pamela Ritchie: I was just going to say  on that point, when we entered the year, which seems like a really long time ago--

[00:15:05] Vince Kraljevic: A lot has happened.

[00:15:06] Pamela Ritchie: --the thought was that the factor most at risk, just because it's done so well, was momentum. Then it continued to do quite well and then there were hiccups and then it came back. What's the risk of momentum at this point? What would you say?

[00:15:20] Vince Kraljevic: The risk with momentum, we approach it from a different perspective but momentum works until it doesn't, is kind of the issue with momentum. Right now it's high quality companies trading reasonable cash flows. If you think about the market in general, there's a high concentration risk. If you look at the top 10, and not that our portfolios have the same concentration as the top 10, but if you think about ... everyone's talking about artificial intelligence. The top 10 companies make up 40% of the S&P 500. If that story breaks down it could kind of ruin the momentum trade in general.

[00:16:02] Pamela Ritchie: There's lots of discussion about that breaking down. Nobody really knows if it will but there's sort of concerns about the concentration risk and how high up in the skies that discussion has gone. There's much more discussion about looking at other parts of the stock market for your investments. Take us there on how the ETFs handle that essentially.

[00:16:22] Vince Kraljevic: In terms of our ETFs or competitive ETFs that are like...

[00:16:25] Pamela Ritchie: Why don't we go across the industry first of all, just sort of the concerns because you can be very exposed to that but then you also maybe want to make sure there's some diversification.

[00:16:33] Vince Kraljevic: Absolutely. With regards to the concentration in the United States the two biggest things that we see people doing. ... top 10 companies make up 40%, trading at extremely high multiples so they're afraid of the valuation concentration risk. The simplest solution is just equally weight it. A lot of people...

[00:16:53] Pamela Ritchie: Just go right across the board.

[00:16:54] Vince Kraljevic: The top five companies make up 25%, let's make them 1%. The bottom 50 make up less than 1%, I think it's 75 basis points, less than 1%, let's make that 10%. But those 50 companies at the bottom, one, they're smaller, they are small-cap, effectively. They're not really high quality. Some of these might be kicked out of the S&P 500 on the next rebalancing. The unintended consequence--

[00:17:20] Pamela Ritchie: Of a passive approach to an equal weight.

[00:17:22] Vince Kraljevic: --of a passive equal weight approach, you're avoiding one problem but you might be creating two or three other ones. The problems that you create by going equal is you're going to small-cap, which depends on your opinion if you think it's a risk-on. If you think it's risk-on then that's fine. They're typically lower quality because usually the best rise to the top, the weakest go down to the bottom. Then you're going anti-momentum. Usually, if you're doing well you're going up, and if you're doing poorly you're going down. You're kind of making these three bets that are most likely unintentional. You're trying to avoid one problem and you're creating another one.

[00:17:57] The next thing that we're seeing is a lot of people are going from large-cap, mega-cap, and they're going, okay, we're going to go small-cap. They're buying the proxy of the Russell 2000. Again, if you think that's going to work that's completely fine but there's a few unintended consequences of that. You're going from massive concentration to smaller cap. The S&P 500, 2% of the companies aren't profitable. I think 40% of Russell 2000 are not profitable.

[00:18:25] Pamela Ritchie: You'd be catching all those in your net.

[00:18:26] Vince Kraljevic: You're catching all of those in a passive approach.  You're going from extremely profitable, high quality back down to small-cap and low quality. The other thing within that is the Russell 2000 has been trading in this range for the last, call it four years. Comes up, late last year we think it's going to break through, it goes back down. It's been in this range, it just recently broke through this range mainly based off of small-cap tech, these quantum names and things, these derivatives are artificial intelligence. Again--

[00:18:58] Pamela Ritchie: Often non-profitable.

[00:19:00] Vince Kraljevic: --often not profitable so now you're trying to get away from big tech and then going to quality tech to low quality tech. I wouldn't say that that's a good trade, I wouldn't take that trade. If you are thinking about small-cap we definitely have Connor and Chris, they can speak to their strategy a lot more, but they go through the entire global universe, about 60 names and they focus on quality small-cap.

[00:19:23] Pamela Ritchie: Sixty, yes.

[00:19:25] Vince Kraljevic: Depending on what they've seen but it's a highly concentrated portfolio. In the investible universe I think there's 6,000 names so they have an active share of 99%. They're eliminating a lot of non-profitable. They're looking for high quality, and based off their background, if I remember correctly, they really didn't cover tech.

[00:19:41] Pamela Ritchie: More industrials.

[00:19:43] Vince Kraljevic: More industrials and utilities and things along those lines. They kind of avoid that. I think they have a 10% underweight relative to their benchmark.

[00:19:49] Pamela Ritchie: This is their U.S. small-cap offering that is an ETF.

[00:19:54] Vince Kraljevic: The fidelity Small Cap Opportunities, global opportunities, and it's a better way. If you do want to make a small-cap trade and you're looking at that universe, why not buy high quality ones?

[00:20:06] Pamela Ritchie: Absolutely. In the U.S., you were mentioning this before,  approvals are changing, actually regulations are changing, lots of financial regulations are changing. We're listening to all kinds of things that are switching up.

[00:20:19] Vince Kraljevic: There's a lot of changes.

[00:20:19] Pamela Ritchie: One of them is what is allowed in terms of ETFs to be issued and traded, ultimately. There's a lot in the U. S. Now, we're talking about the Canadian market but I wonder, there's always consequences when there's a big shift somewhere. Tell us a little bit about that in the U.S.

[00:20:34] Vince Kraljevic: With regards to the United States, to buy an ETF you can literally buy an ETF on any exchange. It's like buying a stock. If there's an ETF in the United State you can definitely buy it, just like an American can buy a Canadian ETF. So gangbuster of a year, again, record breaking. I think I read a stat that here in Canada every trading day we launch 1.5 ETFs, 65% of those were active ETFs. In the United States they're launching almost four ETFs a day, a trading day, and 85% of those are active. That's before this regulatory change is happening.

[00:21:10] To give you a bit of a background, there was this one company that had a patent for an ETF series. We, in Canada, have always been allowed to launch, not always but recently, about five years ago we were allowed to launched ETF series. The rules in Canada and the United States are different. I'm not going to get into the granularity of it but in the United States there's one company that was given notice of approval by the SEC which indicates that they might be able to launch an ETF series of their successful mutual funds. As I said, if you can show a track record, here's this mutual fund that has this 20-year track record, the people are going to be gravitating towards it.  It's not only this one, there's, I think, 70 in the queue so there could be 70 manufacturers that have active mutual funds that they might launch an ETF series on. It's come up in conversation that people have asked, what do you think about this? There's unintended consequences. There's a currency problem, as well as taxation...

[00:22:05] Pamela Ritchie: If Canadians were to buy those. 

[00:22:07] Vince Kraljevic: If a Canadian was to buy that there's a few slippages. If you're buying in small increments there's a currency spread. There's also a double taxation, potentially. The U.S. administration was making a comment that they might increase the withholding and then they backed off on that. There's these little tax issues but the biggest consequence, or the biggest unintended consequence when I was an advisor, was that there might be an estate issue so if you own a U.S. asset you might have to file forms with the IRS to resolve your estate.

[00:22:39] Pamela Ritchie: Beyond just like the ones that we signed [crosstalk].

[00:22:42] Vince Kraljevic: Beyond what you signed here in Canada. If you're over a certain threshold you might have to sign some forms with the IRS, it might hold up probate, it might cause all these problems in unintended ... for three basis points I don't think it's worth dealing with the IRS to resolve probate over anyone's estate. I would steer away from it. You just need to do enhanced due diligence. You'd have to stay on top of U.S. tax law, U. S. estate law and if something goes wrong it's just someplace that I tell clients probably best not to fish in that pond. 

[00:23:11] Pamela Ritchie: The idea is that these offerings may be there in the U.S., easily viable but with those concerns you may consider just staying Canadian in that kind of...

[00:23:19] Vince Kraljevic: I would recommend staying Canadian or you have to do a lot of due diligence with regards to what you're buying to make sure that you don't harm your clients

[00:23:27] Pamela Ritchie: That's really, really interesting. Do you think, in terms of themes small-caps is a discussion that we're having there, exposure to the U.S., broadly speaking there was a time where international has been flying, actually, through much of the year. It's an interesting trade. You have an offering for it. Always curious when we think that has legs. There's always this, well, maybe we'll just go back to invest in the U.S. because maybe we don't need to look outside that. What are some of the comments and thoughts you're getting there?

[00:23:56] Vince Kraljevic: When I was--

[00:23:56] Pamela Ritchie: And flows.

[00:23:58] Vince Kraljevic: --when I was on the show it was first buy America because of U.S. exceptionalism, then it's bye America because of the tariffs and people didn't want to touch the United States, it was buy American again. Year-to-date international has still outsold the United States for a number of reasons. Firstly, just the gross underexposure. Speaking with advisors...

[00:24:21] Pamela Ritchie: It's a value story.

[00:24:26] Vince Kraljevic: It is a value story but you never had to buy it before. In the last 15 years it's been a widow-maker trade. No one's had any exposure to it. I've seen some advisors that have been exclusively North American, no international exposure. Depending on what benchmark you're using you have an underweight of 25 to 50%. It's one of those things that this opened up a lot of eyes. If you had no exposure you're like, okay, maybe I should have 10%, or our All-in-Ones have a 25% weight. A lot of people ask me the question, even in your All-in-Ones you're underweight the United States, and I ask how. We have about a 50% allocation on the equity side, we have a 25% sleeve to international.

[00:25:06] If you look at the MSCI World Index in the 1980s the United State was only 30, then it went up to 50 and now it's 70%. If there is this rotation, if the AI story doesn't work out and old tech, so financials or industrials or utilities, there could be that rotation. The United States went from 30 to 70, now is it going to go from 70 to 90 or is it going go the other way? You're hearing all these stories in Japan, the modernization in Japan, the modernization in Europe. Europe is going to start going from austerity to spending so there's all these tailwinds.

[00:25:46] Pamela Ritchie: So the international catches all of that.

[00:25:48] Vince Kraljevic: The international catches all of that. Again, to your story, it's a value. If you have two companies that are doing identical, in the United States it's trading at 20 P/E and in international it's trading at 10, and it's the same operating margin, profitability, earnings, same client, why would you pay twice the amount of money for a company that's...

[00:26:04] Pamela Ritchie: For something similar.

[00:26:06] Vince Kraljevic: Exactly.

[00:26:06] Pamela Ritchie: It's interesting, as you mentioned the All-in-Ones have exposure to all of momentum growth, low vol, what are we missing?

[00:26:16] Vince Kraljevic: Quality, value, momentum, low vol.

[00:26:20] Pamela Ritchie: If we had to ask you what you think is your, I don't know, factor of choice right now, is it shifting, is it away from momentum? What would it be?

[00:26:29] Vince Kraljevic: That's an interesting question.

[00:26:31] Pamela Ritchie: That's what people say when they don't want to answer the question.

[00:26:34] Vince Kraljevic: When they don't want to answer it, yes. Most people ask in the United States so I'll answer the question on the factor, which I think has tailwinds in the United States. Quality and momentum had been doing well but if you start looking at what's kind of happening with a few data points ... there's that concentration so you have the AI story, concentration, big P/E. What happens if that fails or if it stutters or something along those lines? The opposite to that is value. Typically, you're trading at a very low multiple, and the reason that value does well is because it's already beaten up. Nobody wants to touch it. Everyone's like here's a shiny thing, artificial intelligence, nobody cares about a trucking company or anything along those lines.

[00:27:21] Pamela Ritchie: Except for you need the shiny thing to come buy a truck.

[00:27:24] Vince Kraljevic: Exactly. You have these industries that have been kind of forgotten, they're trading at below what their intrinsic value might be. Then you have this rate cutting cycle. Usually if you're cutting rates  then the companies that had a bad story, they couldn't pay their loans or something along those lines, then their profit margins start improving, things along those lines. It's kind of the early cycle. Usually momentum and quality work in mid, late, and then low vol in recession. If you get this soft landing or you just go like we're cutting rates or...

[00:27:56] Pamela Ritchie: Or we're just not having a recession.

[00:27:57] Vince Kraljevic: Or we're not having a recession, it just skips over. It has some of the inklings of early cycle. I'm not saying that it's like this hard thing but sometimes if you're contrarian you're like, okay, if everyone's looking at artificial intelligence, here's something, small-cap is usually risk-on trade. It's kind of been rallying, not profitable, but then value also works at that time as well. There could be this story that ... and you are kind of seeing a kind of uptick in value that's happening if you just look at its relative strength against competitors.

[00:28:30] Pamela Ritchie: It's totally philosophical but just the idea that for so long U.S. exceptionalism had been the only game in town. It was the TINA discussion. Then international sort of got some wings and it is basically a value ... I'm just wondering if it sort of opened up the possibilities. You just wonder how things link. Maybe they don't link for you but...

[00:28:50] Vince Kraljevic: You're looking at relative, everything's relative. If I'm getting...

[00:28:53] Pamela Ritchie: Things are expensive, yeah.

[00:28:54] Vince Kraljevic: These are very expensive, here's something that's not expensive, what do you think the expected returns of these things are? There's always these most hated rallies of all time. This is one of those things. If you look at the rally in the S&P since the beginning of the year it was dominated by quality. Usually rallies coming off of a trough is like, oh these beaten up companies, we'll buy those. Psychologically speaking I would say that everyone's afraid to make a call so they just went to what they know. The high quality companies, nothing's going to go wrong with that. Now you're looking at we'll see earnings.

[00:29:28] One of a streaming service provided their earnings [indecipherable], if they start missing earnings people are going to start looking around at why am I paying so much for this if we have something over here. Then there's what's the use case. Artificial intelligence, we have these massive companies. I don't know how many artificial intelligences there are, those technologies usually consolidate but who's going to use artificial intelligence?

[00:29:56] Pamela Ritchie: All the other companies.

[00:29:57] Vince Kraljevic: Possibly. If you're a travel agent company and ChatGPT can create all these trips for you maybe you don't need all that stuff. Or it's like an Internet of Things story as well. What if these trucking companies use artificial intelligence to improve logistics and planning and things along those lines?

[00:30:14] Pamela Ritchie: Without a driver. [crosstalk]

[00:30:20] Vince Kraljevic: You're waiting for the use case. Everyone at the beginning of the dot-com was looking at that technology only to realize that the killer app or whatever came down five or six years. You have to turn over rocks. It's probably not where you think it's happening. New tech, old tech, new economy, old economy. I think there's a bit of a story for old economy or things people haven't looked at for a while.

[00:30:43] Pamela Ritchie: Just to sort of sum up, incredible flows, it's been quite a year thus far for the industry, for Fidelity in particular. Maybe good to take a look at a slightly shifting narrative here. It sounds like you're talking about a little bit of a slightly shifting narrative. Pendulum switch up stories.

[00:31:00] Vince Kraljevic: ETFs have always been known to be passive. Every time people are asking me questions it's always about the passive index. There are unintended consequences of index construction. With our factor approach we're like, well, you're the most profitable so why don't we give you money? You're the one that's trading at the fairest price, why don't we give money? You're showing the best momentum, why don't we give ... we build the index using fundamentals, what we learned from our active managers.

[00:31:30] It's momentum, or an index works until it doesn't. Nortel went from 0 to one-third of the TSX, it went back down to 0. If you're in a passive product like that you kind of ride that wave. Same with the Magnificent Seven, they went from zero to one-third. Will they go down to zero? Probably not but is there something else that you're not paying attention to that might come up, possibly.

[00:31:55] Pamela Ritchie: That's fascinating. Really great to have you share your thoughts and sort of the industry view as well. Vince Kraljevic, thank you for joining us.

[00:32:02] Vince Kraljevic: Thanks so much for having me.

[00:32:03] Pamela Ritchie: Thank you for joining us here on Fidelity Connects. Coming up over the next little while, tomorrow, the always exceptional Fidelity Director of Quantitative Market Strategy, Denise Chisholm. She joins us to discuss her latest sector thesis and taking a look at why starting points matter but also why end points in market moments matter a lot as well.

[00:32:20] We'll wrap up the trading week on Friday with fixed income portfolio manager, Sri Tella, for a discussion of the latest credit dynamics and fixed income strategy. You don't want to miss that.

[00:32:28] Next Monday Fidelity Director of Global Macro, Jurrien Timmer. He is back to take a look at the macro themes on his radar, incredible charts and graphs that he will share with you that, ultimately, help the discussion on the latest headlines shaping the markets. Thanks for joining us. We'll see you soon. I'm Pamela Ritchie.