FidelityConnects: North American equities: What’s driving markets now

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<b>Subtitles are AI Generated</b>

 

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Hello, and welcome to Fidelity Connects, I'm Pamela Ritchie.

 

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North American equity markets continue to show positive broadening momentum

 

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despite ongoing geopolitical concerns and policy uncertainty

 

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in the US.

 

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How do strong AI-related earnings come into play in all

 

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of this and will we continue to see a rotation towards industrials,

 

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commodities and cyclical companies in some cases?

 

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Our next guest sees several opportunities across North America including the

 

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metals and the banking space.

 

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We're going to hear how his new Fidelity American Equity Fund offers investors

 

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opportunities across the US.

 

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Do welcome portfolio manager, Darren Lekkerkerker.

 

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And just to let you know that today's webcast features live French audio

 

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interpretation. Warm welcome to you. Nice to see you, how are you?

 

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Hi Pamela. I'm doing great, I'm excited to be here.

 

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Excited to have you here.

 

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Let's talk a little bit about the fund that you've now taken over.

 

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You started running it in early January.

 

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Tell us just a little about it. You've been running North American equities for

 

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some time so it's nothing new in that sense in terms of the approach.

 

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The fund itself, tell us about that.

 

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The fund is called the Fidelity American Equity Fund.

 

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That naturally leads from the fund that I've been running, the Fidelity North

 

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American Equity Fund. Now I have both the North and the regular American

 

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fund. We've launched an ETF that's going to track the Fidelty

 

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American Equity Fund very recently in the last couple of weeks.

 

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The ticker for that is FCAE.

 

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It trades on the TSX.

 

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The idea is within the Fidelty North American Equity Fund, which is 70%

 

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US and 30% Canadian, I've run that for a little bit over 10 years,

 

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a 10-year anniversary was last year.

 

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Congrats.

Thank you very much. Has achieved very good performance

 

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in absolute performance.

 

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I think the 3-year is mid-20% CAGR and

 

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both the 5-year and the 10-year is approximately 17% compounded

 

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annual growth per year on a gross basis.

 

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There's a couple of fistfuls of Lipper Awards that go along with that

 

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kind of performance.

 

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Thank you, it's been the best fund in the North American equity category

 

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for the past five years in a row, and it's above benchmark.

 

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I'm looking to use the same investment style, same

 

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investment process. The goal is to achieve a similar or better

 

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outcome on the American Equity Fund.

 

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If you drill down within the 70% of the portfolio that's

 

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American, that's done better than the S&P 500 during that

 

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10-year. The goal is just to own similar stocks as

 

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I would on the US side of North American Equity Fund in the American

 

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Fund and to achieve a similar, or hopefully better, outcomes.

 

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Some of the style is very ... it's quite concentrated.

 

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How many stocks, roughly, or give a range of how many stocks are in there.

 

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This is in the American Equity.

 

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I would say it's approximately 45.

 

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I's a kind of narrow runway and you choose, obviously very carefully,

 

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everyone at Fidelity does, but it's meant to be rather concentrated in that

 

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sense.

 

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Yeah, I think that's the way that you achieve superior performance, you

 

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concentrate your funds in the number of stocks, but more so in

 

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your top 10 holdings which are typically between 40% to 50% for me.

 

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I think you have to do two things in order to achieve superior results

 

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over time. Number one, you have to make sure you own your best ideas.

 

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I hate it when I listen to one of these and someone can't pin down what's the

 

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best idea, or they give you 20.

 

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You've got to make sure you know what your bests idea are, you've got to own

 

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them. Secondly, you've got to be right in order to get the performance.

 

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Indeed. It's no small task and you have teams of people helping you

 

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with that. Tech companies largely are in the top 10

 

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when you take a look at the North American Equity Fund, and I'm presuming that

 

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will transfer into the American Equity as well.

 

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This is a moment where tech companies and large hyperscalers

 

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are becoming, in a lot of ways, owners of hard assets.

 

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You've been running natural resources on sort of the material side

 

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of that for some time. This must be a rather perfect moment for you to launch

 

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into this, don't you think?

 

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Certainly, it is. Actually, I was the mining analyst

 

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in Fidelity Boston in the mid-2000s during the super

 

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cycle from China.

 

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I'm very happy that those stocks are having a moment,

 

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more than a moment, they've been crushing it.

 

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It's kind of nice to be able to apply that skill to other companies

 

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as well. I think one thing that's very interesting in tech this year, I

 

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think that there's more dispersion than normal.

 

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I think what you're seeing is software stocks down.

 

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I think that internet stocks have been mixed, Google has done pretty good

 

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but some of the other ones have been weak on par, and then hardware and

 

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semi stocks have done really well. I think it's a different year than other

 

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years where you could simply own the index

 

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or own the top momentum stocks and hope to do well.

 

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I think it's something where our skill, which is stock picking, and our

 

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investment process could become more valuable because there's more dispersion

 

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and a better opportunity to outperform the benchmark,

 

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which is our goal.

 

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As you say, there's more stocks to look at. Would you call it a proper rotation

 

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at this stage?

 

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Well, it's definitely been a rotation in the market.

 

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One of the things has been that we've seen a rotation towards early

 

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cyclical stocks. Why is that?

 

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I think people are getting a little more bullish on the economy.

 

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I think the economy was very soft.

 

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I think, particularly following the ... if I go back to last April of last year

 

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when the tariff announcements came, people expected a recession, now there's

 

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not a recession and, in fact, we're actually seeing growth starting to pick up.

 

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Why is that? Lower short term rates, I think the Fed fund rate is about 75

 

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bps to 100 bps lower on a one-year basis.

 

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It's working its way through.

 

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We expect to get the budget stimulus for both consumers and

 

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businesses in the US so I think you're seeing monetary and fiscal stimulus.

 

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If you look at the Atlanta Fed, GDP

 

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nowcast, which is the forecast of the next quarterly GDP, it's up

 

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to approximately 4% from sort of 3 or 2% last year.

 

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I think because of that you're seeing people rotate out

 

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of some of the growthier names that tend to be more expensive into

 

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the cheaper, more cyclical names that could see a benefit from a stronger

 

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economy.

 

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Still big though, still large-cap, still bigger companies for you.

 

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That's right.

 

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You're not taking a look at sort of smaller companies.

 

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I do own a little bit but I would just say that the portfolio

 

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is more geared towards larger cap companies that I think are

 

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higher quality companies.

 

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By that, what do I mean? I think they've got a great business, they've got a

 

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strong competitive moat that, hopefully, can increase over time,

 

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they've got a high or accelerating return on invested capital.

 

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Just to review, I also look for strong management teams that have skin

 

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in the game, have executed well, really good at capital allocation, and

 

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I care about valuation too.

 

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Tell us a bit about policy. As you mentioned, you went back to the tariff

 

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announcements, the impact on that.

 

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Within that, implicit in that, and what's sort of rolled out over the course of

 

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the last year and a bit now is some real

 

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directives on where US policy is going.

 

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Some are harder to read, obviously, but there are certain things that the

 

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government wants to back. There's no question they're actually putting money

 

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behind it so you can see that.

 

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Some of it has to do with exactly critical minerals, natural resources, some of

 

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it has to do on chips side of things, how do you watch

 

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that? What do you do with that?

 

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There was a few questions in there but just to hit on your last question,

 

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which is the government preferences.

 

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For the White House, they've been more involved than past administrations

 

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in businesses and champions or sort of areas

 

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that they don't like. If you look at the past year, some of the sectors

 

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that they tend to like or have prioritized, you mentioned critical

 

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minerals so we can talk about copper, we're starting to see some

 

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stockpiling of copper in the US.

 

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We're also seeing the US, they've partner with a private equity company and

 

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directly invest it in some copper mining companies, which is

 

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not new. China's been doing this for like 10, 20 years.

 

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It's new in--

 

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It's new for the US.

 

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--a different type of economy where normally you let businesses do it.

 

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I think the reason the Chinese did it is because they consume 50% of the

 

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world's copper and the US is less than that.

 

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I think, as you mentioned, we're going into more of a hard asset world, I think

 

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they're signalling it has more importance so we are seeing that.

 

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I think for me, I want to be definitely aware of

 

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what the White House is prioritizing, or deprioritizing, and

 

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think through, hey, does this make sense?

 

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I think I would like to lean towards investing in those companies.

 

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As we've seen last year many of those industries and companies do

 

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well or not well depending on what they liked and didn't like.

 

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Whether they're investing and flowing with policy,

 

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essentially.

 

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Exactly.

 

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So you are kind of doing that. You mentioned software earlier, let's go back to

 

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that. I mean, if you want to really go there, some people talk there's an

 

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absolute bloodbath and there's lots of discussion about how private credit was

 

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overinvested, there's sort of a doomsday story, and there have

 

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been serious sell-offs.

 

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There's also probably some hunting and some interesting opportunities within

 

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there. How do you watch what we've watched and either stay away or lean in?

 

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I think all of our viewers get that the nervousness in the

 

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market is that AI eats software, whereas the tagline used to be software

 

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eats the world.

 

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Now we've seen that switch.

 

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What happened this year to accelerate that because we saw a lot of that last

 

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year, frankly. One of the generative AI

 

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companies, Anthropic, released a new model for Claude earlier this

 

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year which could do a lot more things which made people very nervous

 

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about the sustainability of software moats or the terminal value

 

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of the software companies. I think some of the key areas they worry about is

 

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the pricing or the seed-based model, whether there'll be less employees at

 

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these companies, and competition since it's easier to code.

 

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It was compared to a DeepSeek moment.

 

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I mean, I don't know if you go that far but it sort of felt like that to some

investors.

 

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It certainly felt like. I think what happened a couple of weeks later was they

 

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introduced a plug-in for various industries including

 

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legal and that really hurt the information services group and

 

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we saw these companies [indecipherable]. I think this has freaked people out.

 

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I think you're right,  we kind of talked about this in the pre-show, it kind of

 

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reminds me of 10, 15 years ago when Amazon was the

 

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disrupter. Whenever they announced, hey, we're going to go into this industry,

 

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dollar stores--

 

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Books.

 

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--auto retailer parts, that industry got crushed.

 

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Books, yeah, obviously--

 

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That was in the beginning but yeah.

 

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--that was one industry that was disrupted.

 

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Other industries, I remember at one time it was supposed to be

 

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health care equipment, those companies are doing great.

 

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Also, auto parts retailers, those companies were doing great.

 

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There's some benefits and reasons for sort of the physical

 

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infrastructure or relationships. I think the same thing will happen here and I

 

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think that there will be some disruption.

 

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We did meet with one of the very large

 

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LLM-based companies that is leading to get their perspective on this

 

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and also learn more about gen AI.

 

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Their perspective specifically on the software was that software

 

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will be used more in the new world.

 

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There will be some disruption, not all of it will be disrupted.

 

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I think they had the view that software that is high use or critically

 

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important and/or inexpensive is probably fine because why

 

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redo it, but the opposite of that is at risk.

 

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So there are some risks. I think for the legal stuff, I think the issue is

 

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right now they don't have access to the proprietary data that the

 

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existing sort of legal software companies do have but I guess the market

 

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is nervous, will this change in 5, 10 years from now.

 

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Do you see, this might be a deeper question within that, but you could

 

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use legal, you could probably use lots of different industries, will there be

 

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sort of a, not quite an end of data but there'll be a point where

 

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the data has been consumed, put into models

 

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and the insatiable creation of data, will

 

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it keep up with sort of this initial phase of AI eating data, essentially?

 

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Will that slow down at some point, do you think, once it's done

 

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most of that transition, I guess.

 

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I think you're right. It seems like in terms of

 

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these names just getting crushed in the market, I think right now is a

 

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good time to pick through them all and see, okay, where do

 

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we think that there are opportunities.

 

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I would think back to the framework I just mentioned in terms of the risk,

 

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who actually has benefited and who has accelerating

 

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revenue on that.

 

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It's really interesting to sort of watch how that's being digested

 

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by the market. You kind of famously try

 

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not to look at geopolitical moves.

 

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That's one thing that you often and don't go too heavy into the macro.

 

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That said, we started off talking about early cycle

 

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and perhaps a transition to kind of a

 

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harder asset world, materials and so on, which is very

 

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much a geopolitical story at this stage. It's just kind of interesting how that

 

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all comes together. Do you have any views from sort of how

 

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economies are readjusting themselves in this so-called new world order?

 

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I like the way you framed your question. You're right, I am a bottom-up

 

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investor. What that means for our listeners is I try to

 

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focus on owning the best companies as opposed to trying to predict or

 

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forecast economic variables or different markets,

 

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as I think that that approach yields in higher returns over time.

 

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Just to answer your question, yeah, I am macro aware.

 

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I think the macro environment's supportive. The economy is stable

 

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and accelerating, inflation tends to be coming down

 

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from elevated areas. There's a little bit of risk there as Q1 will probably

 

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be the peak tariff pass-through but markets are forward-looking

 

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as to what the tariff rates are going forward.

 

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In terms of the overall market, short rates

 

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are probably coming down and you have double-digit

 

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earnings growth. Earnings growth has accelerated in the fourth quarter so

 

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far, 13% year-over-year.

 

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I think that's up from around 10, 11-ish% in the previous quarter.

 

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It seems like a pretty nice backdrop for stock picking.

 

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As I mentioned in my earlier point, I think there's higher dispersion that

 

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we're seeing now so I think there's a better opportunity for stock picking and

 

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stock pickers to beat the index.

 

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Let's go into maybe cyclical, maybe not, but we'll go into industrials.

 

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I know it's an area that you've long looked at.

 

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Tell us a little bit about what within that is again, is it all sort of a play

 

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on AI to an extent, the buildout so-called?

 

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I'm bullish on industrials and I'm overweight this industry within

 

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my funds.

 

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A couple of the areas that I tend to invest here, number one is

 

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I'd say machinery.

 

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I think machinery is seeing much stronger demand right

 

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now. I think we're seeing bookings order, it's from a variety of end markets,

 

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but you're right, it is also from AI data centres, is a

 

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big growth area.

 

15:59.758 --> 16:01.694

I think that is part of it.

 

16:01.694 --> 16:04.863

Hello, investors. We'll be back to the show in just a moment.

 

16:04.863 --> 16:08.200

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else you get your podcasts. Now back to today's show.

 

16:32.591 --> 16:36.195

Do you worry about some of, I mean, they've been a bit rocked, actually, in the

 

16:36.195 --> 16:39.898

last couple of weeks, again, by headlines, and they may be nothing and it may

 

16:39.898 --> 16:43.235

just all be leading to trade negotiations that we have to have with the US no

 

16:43.235 --> 16:47.272

matter what, but you do see sort of a slightly changing nature

 

16:47.272 --> 16:48.540

there. Anything to worry about?

 

16:48.540 --> 16:52.544

First of all, I own the US one which have not been affected by that,

 

16:52.544 --> 16:56.582

as well as some of the Canadian ones.

 

16:56.582 --> 17:00.619

I think it tends to be more rhetoric and something that can be

 

17:00.619 --> 17:04.990

solved. We've seen some explanatory

 

17:04.990 --> 17:08.193

statements, I guess, from the Canadian government and some of the companies

 

17:08.193 --> 17:10.029

involved.

 

17:10.029 --> 17:14.033

That kind of leads us into trade renegotiation

 

17:14.033 --> 17:18.270

for the USMCA which will be a big issue later this year.

 

17:18.270 --> 17:21.173

It's hard to predict, as we saw last year with the tariffs.

 

17:21.173 --> 17:25.244

I guess my view is, if you were to ask, it'll probably play out like the

 

17:25.244 --> 17:29.214

tariffs. It will probably feel a little scary but eventually we'll get

 

17:29.214 --> 17:31.283

a deal.

 

17:31.283 --> 17:34.119

I think when we do get a deal I think it'll be very positive for Canada.

 

17:34.119 --> 17:38.590

I think you can see a rerate maybe a little bit for Canada in industrials,

 

17:38.590 --> 17:42.661

also financials, big banks in Canada and some of the consumer stocks.

 

17:42.661 --> 17:46.932

Let's go there to the financials a little bit and specifically certain

 

17:46.932 --> 17:51.036

things that you like about the area, knowing that we are now past

 

17:51.036 --> 17:54.239

— you have to get the Fidelity Connects showing out there, there you go, it's

 

17:54.239 --> 17:58.177

advertising — to being past the

 

17:58.177 --> 18:00.646

mortgage hurdle, I don't know what you want to call it.

 

18:00.646 --> 18:03.949

It seems like it's been ...

 

18:03.949 --> 18:06.919

it's really not something that investors seem to be particularly worried about,

 

18:06.919 --> 18:09.088

those that are looking at financials. Is that fair?

 

18:09.088 --> 18:12.124

I think that's fair. So, Pamela, I had a really good day, I think it was the

 

18:12.124 --> 18:16.128

second day, business day, of this year, in January where

 

18:16.128 --> 18:20.399

I was able to meet in one-on-one meetings with our team with the six

 

18:20.399 --> 18:24.470

large bank CEOs of the six large banks in Canada.

 

18:24.470 --> 18:26.638

That is a good day!

 

18:26.638 --> 18:30.909

I mean, very nice gentleman but also a great update on

 

18:30.909 --> 18:36.348

a very large and important sector for the Canadian economy and stock market.

 

18:36.348 --> 18:40.285

To answer your question, I think that credit costs are elevated

 

18:40.285 --> 18:44.556

and expected to normalize, or come down, which will benefit earnings

 

18:44.556 --> 18:46.925

over the next couple of years.

 

18:46.925 --> 18:50.963

I think that they have navigated the mortgage rate reset

 

18:50.963 --> 18:56.401

well. I think it's less punitive now for

 

18:56.401 --> 19:00.739

borrowers and it's a little bit of a tailwind for the bank's earnings

 

19:00.739 --> 19:04.843

just because five years ago mortgage rates were zero and

 

19:04.843 --> 19:07.513

they're a little bit higher today.

 

19:07.513 --> 19:11.483

Other fundamentals of banks appear strong and so,

 

19:11.483 --> 19:15.554

you know, what's that?

 

19:15.554 --> 19:19.091

The capital markets and wealth management, as you're mentioning, like IPOs,

 

19:19.091 --> 19:23.095

M&As, equity trading, debt trading, all that, because revenues are going

 

19:23.095 --> 19:26.098

up faster than expenses they're managing expenses while they're getting

 

19:26.098 --> 19:27.933

operating leverage.

 

19:27.933 --> 19:31.570

I think the regulator, I think the sentiment towards the regulator is better

 

19:31.570 --> 19:35.641

than it would have been a year or two years ago just given that in the US we

 

19:35.641 --> 19:40.345

have a business-friendly government that wants to deregulate

 

19:40.345 --> 19:44.616

versus increase it. I think that over time could mean increasing

 

19:44.616 --> 19:48.854

capital returns to shareholders through higher dividends and share buybacks.

 

19:48.854 --> 19:52.457

It's really interesting. You sort of hear that the piling on of more

 

19:52.457 --> 19:55.127

regulations has sort of stopped in Canada.

 

19:55.127 --> 19:59.097

Is that fair? I mean, you know much more deeply than I do but is

 

19:59.097 --> 19:59.765

that fair.

 

19:59.765 --> 20:03.735

Yes, and I think it's because we went from

 

20:03.769 --> 20:07.839

a very regulation-heavy standpoint to something that's

 

20:07.839 --> 20:11.443

a little lighter where it seems like the government also ...

 

20:11.443 --> 20:14.646

obviously, the government's same party by different leader so the government

 

20:14.646 --> 20:18.684

has changed, and I think they've had to prioritize economic growth much more

 

20:18.684 --> 20:23.088

than the last party, in part because of the threat from trade from

 

20:23.088 --> 20:26.091

the US. We've seen all these project announcements.

 

20:26.091 --> 20:29.461

I don't think we've seen the shovels hit the dirt yet, there's still

 

20:29.461 --> 20:33.565

submissions to solve for that, but the sediment appears much better.

 

20:33.565 --> 20:37.236

And sort of the capital raise discussions are all around, it sounds like.

 

20:37.236 --> 20:40.872

At least they're in discussion moments for some of those big projects.

 

20:40.872 --> 20:44.643

I think so. I think also the other thing for Canada that's obviously important

 

20:44.643 --> 20:48.580

is resources are booming, gold, copper prices...

 

20:48.580 --> 20:50.849

Let's talk about that.

 

20:50.849 --> 20:54.853

We're seeing some M&A and some capital raises there

 

20:54.853 --> 20:58.790

which benefits these banks. In terms of resources, I feel similar

 

20:58.790 --> 21:02.728

to how we spoke last year when I said I like

 

21:02.728 --> 21:05.230

resources, I'm bullish.

 

21:05.230 --> 21:09.368

I think I said I prefer gold, uranium,

 

21:09.368 --> 21:13.305

copper and wasn't keen on energy when we spoke, we would have spoken like maybe

 

21:13.305 --> 21:17.576

middle of last year. I'd say now it's similar but I prefer the metals over

 

21:17.576 --> 21:21.713

energy. I would probably switch copper over

 

21:21.713 --> 21:25.684

gold. I still like both so it's a little hard

 

21:25.684 --> 21:30.422

to ... I find silver is very volatile and

 

21:30.422 --> 21:34.559

high beta. Obviously, it went up a ton, I think it went to like $120

 

21:34.559 --> 21:38.964

an ounce and now it's back to $80 an ounce which is still up yea-to-date.

 

21:38.964 --> 21:43.068

I generally like it just because I think if you like gold, I think

 

21:43.068 --> 21:47.039

of silver as it's like high

 

21:47.039 --> 21:50.609

beta cousin of gold, maybe.

 

21:50.609 --> 21:54.579

Without going too deep on silver, supply tends

 

21:54.579 --> 21:57.482

to be inelastic because it produces a byproduct.

 

21:57.482 --> 22:00.085

In terms of gold, let's focus there more.

 

22:00.085 --> 22:00.319

So I think that...

 

22:00.319 --> 22:03.889

Because it was so important to the TSX last year, it was incredible.

 

22:03.889 --> 22:08.427

I think it's volatile. It's had a run, it's had a little bit of a pullback.

 

22:08.427 --> 22:12.464

It's a little bit hard to forecast, it's actually really hard to

 

22:12.464 --> 22:16.401

forecast. I think just generally the demand drivers

 

22:16.401 --> 22:20.639

of US dollar diversification, elevated geopolitical

 

22:20.639 --> 22:24.609

risks and countries around the world, monetary

 

22:24.609 --> 22:28.947

stimulus and larger budget deficits of populist governments probably

 

22:28.947 --> 22:32.584

set to continue. I think that demand will still be there for gold.

 

22:32.584 --> 22:37.556

It's gone up a lot recently so it's hard to see what it does in the near term

 

22:37.556 --> 22:41.493

but I think  generally I still like it. For copper, I think it's also a

 

22:41.493 --> 22:42.594

hard asset play.

 

22:42.594 --> 22:46.832

We mentioned earlier about stockpiling in the US, US government directly

 

22:46.832 --> 22:49.501

investing, so that seems quite bullish.

 

22:49.501 --> 22:51.770

The supply side is very bullish.

 

22:51.770 --> 22:56.641

There's been four large mines that are not producing due to

 

22:56.641 --> 22:59.978

political reasons or mine operations issues.

 

22:59.978 --> 23:03.749

The demand side could be a little better, 50% comes from China, that demand

 

23:03.749 --> 23:07.586

tends to be a bit softer.

 

23:07.586 --> 23:09.921

I think the price of copper is up a lot.

 

23:09.921 --> 23:13.859

It's above its fundamental price, I think, in my view, but at the same time

 

23:13.859 --> 23:16.862

there's other bullish characteristics of it.

 

23:16.862 --> 23:20.565

I like it. I think on energy, it seems there's too much supply.

 

23:20.565 --> 23:24.503

Last year I was right the commodity,

 

23:24.503 --> 23:27.806

wrong on the stocks. The stocks went up a lot despite the commodity being down

 

23:27.806 --> 23:29.574

25% this year.

 

23:29.574 --> 23:34.045

It seemed to be, not decoupling quite but there's less correlation

 

23:34.045 --> 23:35.514

in the way that there was.

 

23:35.514 --> 23:39.684

I have some positioning, but it's more modest versus metals and mining.

 

23:39.684 --> 23:43.622

Let's talk about the consumer, the consumer probably in the US and

 

23:43.622 --> 23:47.559

in Canada. In the US lots is discussed about

 

23:47.559 --> 23:51.029

the K-shaped economy. I think probably Canada has that as well, I'll ask you

 

23:51.029 --> 23:55.167

that, do you see that there's something with the

 

23:55.167 --> 23:59.104

deregulation, the One Big Beautiful Bill and so on in the US, that will

 

23:59.104 --> 24:03.141

help sort of the bottom piece of the K lift a bit in terms of the

 

24:03.141 --> 24:04.643

consumer story?

 

24:04.643 --> 24:08.413

I think every country has some aspect of the K-shape.

 

24:08.413 --> 24:10.682

I think our K-shape is more modest here.

 

24:10.682 --> 24:14.820

As you know, Canada tends to be more of a country of the middle.

 

24:14.820 --> 24:18.557

In the US, I think you said it well, I think that we could lift the bottom part

 

24:18.557 --> 24:20.525

of the K.

 

24:20.525 --> 24:24.663

Why is that? Lower rates and fiscal stimulus, I think the tax

 

24:24.663 --> 24:28.667

returns or refunds are going to start in March so

 

24:28.667 --> 24:33.939

that's coming up and sentiment could improve and we could see it in better

 

24:33.939 --> 24:35.707

consumer spending data.

 

24:35.707 --> 24:39.611

I think these stocks were bombed out last year and so they have cheaper

 

24:39.611 --> 24:42.948

valuations so it is an area that I'm interested in.

 

24:42.948 --> 24:45.517

Where am I interested?

 

24:45.517 --> 24:51.690

Retail, I'd say autos, also other sort of...

 

24:51.690 --> 24:55.861

The auto parts or more...

 

24:55.861 --> 24:59.965

The parts, I'm interested in less because the parts tend to

 

24:59.965 --> 25:02.267

do well when the overall number of autos does the best.

 

25:02.267 --> 25:06.571

There is some concern

 

25:06.571 --> 25:11.042

there that they could get hurt on these memory chips going up, the DRAM

 

25:11.042 --> 25:15.013

price. I have a little bit of exposure to the parts in my

 

25:15.013 --> 25:17.182

Canadian fund. I still think they're cheap and they could get some rebound but

 

25:17.182 --> 25:21.353

I think there's a better opportunity to own the auto manufacturers

 

25:21.353 --> 25:23.555

and some of the more related industries.

 

25:23.555 --> 25:27.626

Also, as I mentioned, I like retail and hotels as well, just as

 

25:27.626 --> 25:28.693

a play on consumer spending.

 

25:28.693 --> 25:32.163

The consumer spending story, that's really interesting.

 

25:32.163 --> 25:36.601

What would you kind of like to go back to give investors

 

25:36.601 --> 25:40.505

a message of sort? I mean, I came in with this sort of question mark of there's

 

25:40.505 --> 25:44.543

a bit of a barbell with early stage and

 

25:44.543 --> 25:48.880

these large hyperscalers becoming essentially hard asset

 

25:48.880 --> 25:50.715

owners.

 

25:50.715 --> 25:53.518

It's an interesting moment for your style of investing.

 

25:53.518 --> 25:58.023

I'm sure there's more to it. What would you want to leave investors with?

 

25:58.023 --> 26:02.227

In terms of fund positioning, I would say that that's right, I do

 

26:02.227 --> 26:04.629

continue to like tech and communications.

 

26:04.629 --> 26:07.666

I'm trying to be very selective in what I own in these industries.

 

26:07.666 --> 26:11.169

As I mentioned, there's higher dispersion but I think there's some

 

26:11.169 --> 26:15.140

opportunities here. I like the early

 

26:15.140 --> 26:19.311

cyclicals. I tend to have increased my exposure in consumer, industrial

 

26:19.311 --> 26:24.182

and financials, and then I own mining and metals.

 

26:24.182 --> 26:26.918

That's what I would say in terms of fund positioning. I think overall I would

 

26:26.918 --> 26:30.522

say I'm excited to run the new fund, the Fidelity American Equity Fund, and the

 

26:30.522 --> 26:35.527

new related ETF FCAE, which trades on the TSX.

 

26:35.527 --> 26:39.564

I'm exciting to try to get the same outcome as I have

 

26:39.564 --> 26:41.900

in the North American Equity Fund.

 

26:41.900 --> 26:46.605

I'm happy that the fund has had strong performance

 

26:46.605 --> 26:49.341

and I'm working hard to try to continue that.

 

26:49.341 --> 26:52.544

You're the biggest shareholder in which fund?

 

26:52.544 --> 26:53.345

North American Equity Fund.

 

26:53.345 --> 26:55.480

That's always a good thing for investors to know.

 

26:55.480 --> 26:59.718

Darren Lekkerkerker, thank you for joining us and sharing your investment view

 

26:59.718 --> 27:01.987

and what you're leaning into for this year.

 

27:01.987 --> 27:02.287

Thank you very much.

 

27:02.287 --> 27:03.555

Thank you very much. Thanks, great questions.

 

27:03.555 --> 27:06.191

Thanks for watching or listening to the Fidelity Connects

 

27:06.191 --> 27:10.495

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The views and opinions expressed on this podcast are those of the participants,

 

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and do not necessarily reflect those of Fidelity Investments Canada ULC or

 

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its affiliates. This podcast is for informational purposes only, and should not

 

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