FidelityConnects: Opportunities in global high yield

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Hello, and welcome to Fidelity Connects.

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I'm Pamela Ritchie. Yesterday's sharp sell-off on Wall

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Street has investors rushing to safer assets, like Treasuries,

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pushing yields a bit lower.

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Even so credit fundamentals remain solid with tighter

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spreads and strong demand for yield.

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At the same time our next guest notes that we're also seeing

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growing dispersion and some early signs of stress in

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parts of the loan market.

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What's really driving this push and pull in credit right

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now, and where should investors be looking if conditions

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become more volatile?

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Joining us here today to break it all down is fixed income

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portfolio manager, Peter Khan.

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Welcome, great to see you, Peter.

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Nice to be here, Pamela.

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Thanks for having me.

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Delighted to have you here. It's Friday, Happy Friday to

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everyone. Do send questions in for Peter over the next 30

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minutes or so.

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Let's begin with data centres, what's

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funding them. Lots of debt being demanded

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at this point.

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We just look to you for your moment in the markets here right

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now because we've got you seated here and you're a trader.

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You're trading this stuff. What's going on out there?

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Well, it's a good time to be a trader because there's a lot of

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volatility in the markets at the moment.

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There's also a lot of uncertainty about how many

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of these data centre models are going to be

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required in 3, 5 or 10 years' time.

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The projections at the moment are just astronomical, as you

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well know, Pamela, about the degree of

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capital expenditure that's going to required for the

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hyperscalers et al to achieve their dreams.

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We're talking trillions of dollars over the

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course of the next few years.

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It's not so

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easy to find trillions of dollars in one place only

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so sponsors and companies have been assiduously

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courting investors for a few

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months now but really is...

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All kinds of investors.

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All kinds of investors, in style, in investment grade

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credit, asset-backed credit, high-yield credit, private

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credit, all of these channels need to be,

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for lack of a better term, exploited.

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I mean, I kind of want to say used and abused by

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those who are trying to achieve

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the buildout.

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We've seen a lot of activity in every corner of

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the market, particularly in last couple of months.

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Some of...

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Tell us about that, there's a really big one out there that

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... would it have caught you off guard even?

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I mean, this is what you do every day and have for your career

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but it was a big bond sale.

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For sure. What you're referring to is obviously

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the beignet, I hope I said that right--

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Yeah, I do too because I couldn't correct you.

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--finance deal. It's a JV

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from Meta and Blue Owl, which is a

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large private credit investor.

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It was cheekily named because the data centres are based in

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Louisiana, so a reference to the famous Café Du Monde down in

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New Orleans.

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They certainly offered quite a sugar rush to investors because

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what came was a $27 billion investment grade deal,

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one of the largest single tranche investment grade deals that

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we've seen in history, not just this year.

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Very uncharacteristically it went up 10 points.

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That's not your garden variety performance

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for even high yield bond or maybe even an equity IPO

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to register 10% on a day, that's maybe

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a little bit more mundane. This sort of thing never

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happens in investment grade credit so

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why did they leave so much value on the table for investors?

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Well, that's because $27 billion is

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a drop in the bucket relative to the financing needs.

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Is there anything that you would point out to everyone that is

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slightly different in the structure?

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We're hearing a lot about the circular financing that's going

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on right now. There are lots of different pieces that are a

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little bit ... just slightly different financing that is going

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on. Anything to either worry about, note from your

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perspective? You look at this all day.

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Some people are saying the hyperscalers

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want to go ahead and use their free cash flow for this

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and don't want to use debt but they're finding kind of some

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other creative ways to make that happen.

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What would you point to that's interesting about the structure

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of some of these deals?

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That's a great question. They do have a lot of cash

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that they've been accumulating over the last decade plus

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that they can decide to contribute

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to the overall investment need.

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Rather than debt.

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Rather than debt but clearly, again, scale is

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required here so the cash alone won't do it.

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Secondly, clearly, they wouldn't necessarily want to put all

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of their eggs literally in that one basket and continue to

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have flexibility to fund share repurchases, dividends,

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other needs, not to mention rainy day funds.

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Doing things with other people's money is what the financial

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market has learned how to do, particularly if you need to do

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it in size over the course of

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the last 20 and 30 years.

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As long as there's adequate security and compensation

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we're willing to at least consider a number

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of those proposals.

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The kind of model that's coming in now to back some

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of the data centre buildouts, it's not homogenous.

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We've seen a few deals in the

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high yield market since the mid-summer

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that have come in either with a large

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hyperscaler backstop on a

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speculative shell that is building out the data centre on

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their behalf.

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Like a SPAC.

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It's not necessarily like

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a SPAC but more of a financial

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guarantor, kind of like a bank of mom and dad

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sort of model, sending this

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venture out to build something on their half

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that needs a lot of investment and a lot of time

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and critical parts in order to be

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constructed and created but saying like, I'm there, don't

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worry, I'm the fallback.

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That's clearly as credited investors wanting

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something firm to hold onto more so

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than a promise or a pledge of shares,

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that's going to have a greater attraction than deals that

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are based on, let's, say flimsier guarantees.

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It's fascinating.

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Is there a little bit of a, air pocket's maybe not the right

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word but the idea of displacing water on

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some level when you have deals this size in the market.

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I'm just kind of curious how you see possibly

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a good ripple effect but we are seeing a lot of equity market

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volatility. The question has to be asked whether the

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ripples are not a good effect, that this

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is changing the market in a difficult moment for it to digest

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it. It feels like it's hard for the market to digest some of

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these stories.

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That's an interesting observation.

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It's true, displacement, I mean, we don't

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necessarily think of things as a zero-sum game when we're

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considering any individual investment in the fund but

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you do want to think about things as alternatives or

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substitutes or where's the best use of capital,

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where's the opportunity cost.

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I wouldn't necessarily say we're achieving any sort

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of critical mass such that there is a

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limitation on the available investment.

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That's good to know.

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Why do I say that? Overall it's difficult to

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prove but the overall sensation is that

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credit as an asset class may be under-owned

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by large global institutional investors.

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Part of that can just be sort of tacit.

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Equity markets have done so well that their relative weight in

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equities has risen so they may need to

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true up, top it up.

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There's a lot of liquidity available in the overall system,

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which we've talked about before, driven by Fed and other

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central banks.

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The other item to think about there is

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that it's a simple sort of relative value game.

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In the high yield cases in particular that I referred to

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earlier you're talking about instruments

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that are going to be rated, say, low double-B, a

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little bit of default risk, not too much default risk.

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Your bog standard double-B for a consumer

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products company or a packaging company or utility trades

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around 5%,

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5 1/4, 5 1/2 for a 5-year bond.

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The kind of return on offer in

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these data centre deals originally was

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7 1/2. It's come into maybe 6

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3/4 over the last couple of weeks but that's still

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150 basis points excess premium which is nothing to

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sneeze at in our space, so you have to consider it.

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Well, in your space, okay, so let's talk about the high yield

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market. When we've spoken over the course of every sort of two

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or three months, have a conversation, I mean,

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the fund itself, taking a look at some of the opportunities

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that you were using there, I mean, the yield was

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up to, well, it was higher than sort of 7, 8%, was it not?

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It was. As we went through the summer

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and conditions were perfect in

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every sense of the word

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we saw the yield on the market come all the way down to about

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6 1/2, 6 5/8. The

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little bout of volatility and

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let's not overlook the macro factors here, not

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least kind of the markets continual sort

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of wrestling with the idea of the Fed's going to cut a lot or

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the Fed can't cut a lot.

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We've talked about that dynamic in the past.

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This week has provided another one of those moments.

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Correct, the pendulum is swinging back to

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the Fed is kind of boxed in, they can

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make some micro-adjustments to rates here but by no

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means are they going to be slashing them by more than

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1% over the next 12 months.

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So the market story in equities is obviously AI,

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the market story in high yields is also AI.

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I mean, is that what you're looking at right now?

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You mentioned consumer packaging, that doesn't sound like AI.

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What are you invested in?

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That's the beauty of the high yield market, particularly the

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U.S. high yield market, because it's kind of deep and

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broad with a lot of sectoral diversification.

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We're not necessarily dominated by any one sector.

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The largest sector in our space is still energy which is about

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12% of the market.

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Then it kind of falls down from there, technology, low to

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mid-single digits.

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It's there, it is real.

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You mentioned the ripple effect and positive

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ripples and negative ripples, the negative ripples are clearly

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related to the extreme tightness

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of correlation across asset classes right now.

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So we have to pick that apart a little bit because people

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worry about a 2022-like moment where

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sort of everything went down together.

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I have to ask you that. That is something that you're marking.

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It's a significant risk.

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We had some interesting conversations within our global fixed

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income team over the course of this week.

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One of, I think, the best observations that was made was

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actually made by one of our emerging markets portfolio

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managers who shared around

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a chart of the correlation between emerging market fixed

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income returns and the S&P.

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The correlation there has never been tighter.

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There is deep concern that with so much of the

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S&P's returns driven by

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the Mag Seven, the rest of the

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equity universe is clearly not having a bad earnings season,

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things are improving but it's basically the rich getting

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richer and everybody else being left to scrap

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over the crumbs.

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It's very EM.

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It's very EM. Of course,

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you're gonna attempt to me to digress into how many things

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are very EM now south of the border here in

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terms of the behaviour of the government.

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Well, now that you mention it, yes.

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Well, I mean, that's what commentators

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will say, right, that there's a structure politically but also

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a little bit in the markets.

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I guess just through your lens is that interesting?

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Does that make you want to diversify away from the United

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States for that very reason?

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Is there currency risk?

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Do comment a little bit on that.

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That's for sure on the top of our

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mind. In general, when correlations are

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tight we want to be more diversified because it's very

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difficult to call when things will inflect

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from one day to another.

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Having too much concentration in one particular space is

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an issue, in general.

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In the U.S.

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the great debate is not that things are going to go from

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feast to famine overnight but clearly

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things are turning, things are changing,

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conditions are evolving. We're entering into a different world

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with a more robust industrial policy that's

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being actively managed out of the executive branch with

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the central bank.

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We've talked quite a lot...

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The government itself, the structures of government itself all

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being managed a little bit more by the administration than in

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the past.

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Managed more by the administration than in the past and

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critical ones from a market perspective being debased

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to an extent. Of course, your question

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really gets at debasement

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Because it's not for the administration, I mean, as we

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understand it it's one of the goals to help with the debt

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burden that they're dealing with but that is a story

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that as an investor sitting in Canada or anywhere around the

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world is not necessarily one that you want to help with, or do

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you, I guess?

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Well, I mean, the entire

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sort of G7 system plus China is weighted down with

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excess debt, excess deficit and one of the classical

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mechanisms to manage your way out of that would be simply

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to inflate your way out of that.

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Regardless of the details of what's being implemented

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in the U.S. and elsewhere that seem s to be

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the pure fact on the ground is that there is some desire

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to reflate in order to make the

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debt problem go away.

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Or at least eat away at it.

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Exactly. The question is like it's

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always a matter of a rate of change in markets,

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as you know.

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If things happen in a disruptive and disorderly fashion

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that's bad. That can switch off the spigots and slow

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down financing.

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At the end of the day our economic model

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in Canada and in the U.S.

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and the rest of the Western world is very credit driven.

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We saw what the experiences were with an

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extended shutdown of the credit mechanism in the financial

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crisis and with temporary shutdowns of the credit mechanism

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with things like COVID and Russia-Ukraine.

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It funds the joint.

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Correct.

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You don't want it to come to a halt or to shut

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down. That said, as a trader you take

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a look at high yielding bonds

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as a matter of course.

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That means on some level you rush towards

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danger. When there's a moment to invest and others

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are fleeing you walk in fearlessly,

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we understand.

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What opportunities are out there because there's real vol

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out there and there's concern that there's more to come.

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Whether there is or there isn't the expectations are there.

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That's a great point.

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We try to be as fearless as we can but sometimes we go

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in with knees knocking or whatnot.

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It helps to have done your homework

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before. That's the benefit of

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Fidelity and its global network of

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research expertise and risk management expertise.

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We can bounce ideas off of one another in the fixed income

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team, we can speak to our equity colleagues.

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You have eyes all over the world, literally.

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Exactly, and exchange of information, feedback,

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exchange of ideas, thinking through how we

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can do this, all predicated upon the bottom-up fundamental

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research that is done by the equity

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and credit research teams that can help us focus

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and try to shut out some of the noise in these situations.

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As active managers or as traders, whatever the

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term you might want to use, but as active

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portfolio managers we do relish these opportunities

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when volatility picks up and gives us

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a chance to really focus on the

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opportunities that we haven't been able to participate

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in yet because we've had some kind of objection whether that's

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related to the value on offer before or we

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didn't have enough information yet but we've continued to

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try to peel away the layers of the

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onion and get at what really drives a particular

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business or what might make a credit perform or not

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perform. That's an excellent opportunity

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for us in general.

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I was going to just add in to that, what

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sort of information is given to you in market

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drawdowns? That said, you anticipate a lot.

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The team of analysts that you just referenced are there before

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events happen to sort of on some level know what would

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happen in X situation.

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That said, you must gain some data, some information from

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wobbles in markets. I mean, it gives you data about a company

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and how it does, for instance.

[00:17:57.320]

What do you gain from moments of volatility beyond

[00:18:00.680]

just the pure investment of just sort of learning about how

[00:18:03.840]

the structure is either strong or weak in certain areas.

[00:18:08.280]

That's one for sure.

[00:18:09.640]

I mean, Dick Cheney passed away, lots

[00:18:12.880]

of people have things to say about that, and he and his

[00:18:16.120]

neocon friends, they always used to focus on

[00:18:19.720]

known unknowns and unknown unknowns.

[00:18:21.160]

They did, that's right.

[00:18:22.640]

We used to hear about that.

[00:18:23.160]

I guess the most important thing

[00:18:26.680]

to know heading into all this is to appreciate what you don't

[00:18:29.680]

know and what you can't know.

[00:18:32.600]

Embrace the mystery.

[00:18:33.560]

That's one thing.

[00:18:35.000]

What you do find out is you expected A

[00:18:38.200]

to happen and then B happened.

[00:18:43.000]

Sometimes that's for the better and sometimes it's not.

[00:18:46.320]

For us as credit investors being glass half

[00:18:49.440]

empty, of course, all the time,

[00:18:53.920]

we tend to ... we try not to be but we tend

[00:18:57.040]

to try to then isolate and say, okay, we thought

[00:19:00.280]

this particular sector or story was going to

[00:19:03.520]

be a lot more resilient in the event

[00:19:06.840]

of a downturn, or we didn't

[00:19:10.360]

expect it to move that much. In the

[00:19:13.560]

best case scenario we don't own it and it's really moved

[00:19:16.840]

a lot to dramatically change the risk-reward

[00:19:20.080]

proposition. In the worst scenario we do own

[00:19:23.240]

it and we've clearly missed something that the market is

[00:19:26.360]

homing in on or focused upon and we need to ascertain pretty

[00:19:29.600]

quickly is that something from

[00:19:33.040]

the bottom up that we haven't been appreciating

[00:19:36.640]

the risk factor correctly, or

[00:19:40.360]

is it some related but

[00:19:43.800]

macro force. Almost is it a force majeure

[00:19:47.200]

type of event, there's just a market liquidity factor.

[00:19:49.680]

You have, as we just said, a team

[00:19:52.800]

around the world to figure that out faster

[00:19:56.520]

than most other people who don't have teams around to

[00:19:59.840]

figure out very quickly what the action needs to be, for

[00:20:02.520]

instance.

[00:20:02.800]

Absolutely. Absolutely.

[00:20:05.240]

Then we can take that action and implement it as quickly

[00:20:08.600]

as the markets will allow us to.

[00:20:11.400]

There's a bit of art and science to that when

[00:20:14.600]

it comes to credit trading.

[00:20:16.520]

It's fascinating.

[00:20:18.000]

In the moment, I mean,

[00:20:21.280]

you are hearing anecdotally that some,

[00:20:24.880]

obviously, love being in equity markets, it's been an

[00:20:27.160]

incredible time.

[00:20:28.600]

There are, obviously, these concerns.

[00:20:30.320]

We'll hear from some of your colleagues like Sri Tella that

[00:20:33.480]

you'll see some equity investors taking some chips off the

[00:20:36.520]

table, going to book it into the fixed income

[00:20:39.840]

side of their portfolio a bit more.

[00:20:41.720]

You see some of that.

[00:20:42.720]

Is there an argument that if you want to take some risk and

[00:20:45.120]

you're the right person, you've done all the information,

[00:20:47.040]

you've spoken with your advisor, that you could have high

[00:20:49.800]

yield as your risk exposure within a

[00:20:53.040]

portfolio instead of?

[00:20:55.000]

Does that question get asked or tossed around?

[00:20:57.000]

Yeah, it does get asked. Institutional

[00:21:00.800]

investors to individual investors that consideration

[00:21:04.080]

as to whether or not a growth-like asset

[00:21:07.480]

can be found that doesn't have all of the

[00:21:11.080]

kind of volatility characteristics of equities,

[00:21:14.360]

whether large-cap, mid-cap, small-cap, whichever flavour

[00:21:17.880]

is their preference.

[00:21:19.240]

And private credit is one way

[00:21:22.440]

of doing that but this also has a little more visibility.

[00:21:26.040]

Visibility and liquidity. Quality,

[00:21:29.800]

transparency and governance have clearly been

[00:21:33.520]

in focus when it comes to what's been going on in

[00:21:37.200]

the private credit market and the broader leveraged finance

[00:21:40.000]

markets over the course of the last two

[00:21:43.120]

months in particular.

[00:21:46.320]

Jamie Dimon, bless him, he's likely right

[00:21:49.800]

that where there's one--

[00:21:51.920]

This is the cockroach story?

[00:21:52.040]

--there will be another because

[00:21:55.840]

the kind of environment that we've been in with easy

[00:21:58.520]

liquidity, easy financial conditions, sort of

[00:22:01.680]

a seller's market when it comes to raising debt

[00:22:05.240]

is one that historically

[00:22:09.320]

has proven to generate some malfeasance and this...

[00:22:13.800]

Let's go into the moment for high yield debt at

[00:22:17.160]

this moment because it sounds like it's a really interesting

[00:22:19.360]

opportunity for those that would like a very nice yield in

[00:22:23.480]

many cases but, again, just higher

[00:22:26.680]

in the pecking order. What is this moment for high yield debt

[00:22:29.240]

for investors?

[00:22:30.640]

Well, it's a very interesting opportunity,

[00:22:34.360]

still, right? We talked about it before earlier in the summer,

[00:22:38.000]

7% yield, low duration,

[00:22:42.080]

reasonably low volatility.

[00:22:43.680]

Here we are still. We've travelled all the way to 6 1/2, we

[00:22:46.440]

backed up to 7, 7% yield,

[00:22:49.880]

reasonable credit quality at the overall aggregate market

[00:22:52.840]

level. Taking a diversified approach to capture

[00:22:56.320]

that income stream in an environment when risk-free

[00:22:59.440]

rates have fallen and volatility is rising in

[00:23:03.440]

other asset classes is not the

[00:23:06.640]

worst place to park and earn a

[00:23:09.880]

pretty happy and healthy risk-adjusted return

[00:23:13.200]

on your allocation.

[00:23:14.320]

That's fascinating. There's a question coming in that has to

[00:23:16.320]

do with the correlations that we were talking about a little

[00:23:18.120]

bit before.

[00:23:19.920]

Equities in the U.S. tend to be correlated with EAFE.

[00:23:22.680]

Does the same apply to U.S.

[00:23:26.680]

versus global credit? Interesting.

[00:23:32.520]

That's a very good question.

[00:23:34.080]

The U.S. credit market is the largest one, particularly if you

[00:23:36.800]

get into my little corner of the world

[00:23:40.040]

in high yields.

[00:23:41.800]

How big is that market?

[00:23:42.640]

Well, overall, the U.S.

[00:23:44.480]

high yield market is about 1.4 trillion.

[00:23:47.560]

The European high yield market is the next largest and

[00:23:50.680]

that's roughly 450 billion.

[00:23:56.080]

Globally do you get to sort of 2 and something?

[00:23:58.320]

You get to 2 and something, that's right.

[00:24:01.480]

The tail doesn't necessarily always

[00:24:05.080]

wag the dog but you can see significant divergence

[00:24:08.680]

depending upon regional qualities and characteristics.

[00:24:12.040]

Between Asia, which has clearly been very China dominated

[00:24:15.320]

and particularly China property dominated,

[00:24:19.080]

behaved in a very isolated and idiosyncratic

[00:24:22.440]

manner for a long time but things have caught up there

[00:24:25.800]

as the market has naturally cleansed itself with

[00:24:29.520]

... that's kind of cleansing by fire, cleansing by default is

[00:24:32.360]

what we see in the high yield market.

[00:24:34.960]

As things sort of fall off you're

[00:24:38.160]

left with a residual that's more resilient.

[00:24:42.200]

Then when that happens things tend to trade

[00:24:45.480]

a little bit more together because you're not

[00:24:49.520]

asking that question about what is it specifically about this

[00:24:52.520]

sector or these big companies in that space that is very

[00:24:55.040]

different from the rest of the world.

[00:24:56.720]

At the moment we're kind of in that space where correlations

[00:25:00.080]

are a little bit higher. European high

[00:25:03.320]

yield has been doing its own thing because the

[00:25:06.680]

composition of that market is rather different.

[00:25:09.960]

It's more double-B heavy but it's also got a

[00:25:13.960]

tail of triple-C assets.

[00:25:15.880]

It's a lot more concentrated than

[00:25:19.040]

triple-C in U.S. high yields.

[00:25:20.360]

Because they haven't moved up and cleaned themselves up enough

[00:25:22.480]

or...

Well, Europe is still very much a

[00:25:25.640]

bank dominated financing model so the

[00:25:29.120]

corporate finance split is more heavily skewed to

[00:25:32.320]

use of banks and private credit in Europe, particularly for

[00:25:35.280]

smaller companies that are not so

[00:25:39.120]

accustomed to dealing with the demands of

[00:25:43.160]

public side investors and who simply

[00:25:47.000]

don't want to ...

[00:25:48.720]

and it is demands. If you've been

[00:25:51.840]

running a family business for several generations

[00:25:55.080]

and all of a sudden some sharp-elbowed

[00:25:59.960]

public investor starts asking you questions that you're not

[00:26:02.600]

comfortable answering it's much easier to go to your banker.

[00:26:05.800]

Oh, that's so interesting. You spent quite a lot of time in

[00:26:08.240]

London on the European debt side of things.

[00:26:11.320]

This is an area that you know well.

[00:26:12.680]

Tell us a little bit about the fund, what investors take a

[00:26:15.760]

look at when they dive into the high yield fund.

[00:26:20.040]

The first thing to think about is what's the overall appetite

[00:26:23.520]

for credit risk?

[00:26:24.960]

Are you looking for outperformance of credit

[00:26:28.320]

or are you taking a more measured approach?

[00:26:33.400]

The fund management universe over the course of the last year

[00:26:36.200]

has been taking a fairly measured approach.

[00:26:38.120]

We wouldn't necessarily say we're significantly different

[00:26:42.080]

from them in that overall sort of risk appetite.

[00:26:46.160]

That's informed by the fact that we want to focus on

[00:26:48.840]

generating investors' solid returns over

[00:26:52.160]

a longer horizon.

[00:26:53.600]

We're not thinking, you know, we, of course, are thinking and

[00:26:55.840]

managing on a day-to-day basis but we really want to be able

[00:26:58.600]

to generate consistent long

[00:27:01.680]

term returns for investors.

[00:27:04.160]

One of the best ways to do that in high yield is

[00:27:07.680]

not necessarily by chasing the latest and

[00:27:10.800]

greatest thing.

[00:27:12.840]

You want to have a little bit of that but you don't want to be

[00:27:16.680]

overly concentrated in too many go-go names because really

[00:27:19.640]

what generates returns for investors in our space is avoidance

[00:27:23.000]

of the stuff that blows up.

[00:27:25.360]

We're not the equity market, things don't necessarily always

[00:27:27.960]

go to zero if they go totally wrong

[00:27:31.360]

in our space but we do have the asymmetric

[00:27:34.760]

risk problem of the payoff profile in

[00:27:38.000]

our space so it makes sense to choose selectively.

[00:27:42.040]

Let me ask you as a final question, how

[00:27:45.200]

does investing in high yield help you stay invested,

[00:27:49.200]

not hit the sell button?

[00:27:51.600]

It helps you move up the

[00:27:55.200]

capital structure, if you will, so out of that thing

[00:27:58.640]

that's out there on the ledge or close to the

[00:28:01.720]

ledge that it may go up 100% but it may also

[00:28:05.080]

go to zero while

[00:28:08.280]

taking advantage

[00:28:11.360]

of the fact that our space within

[00:28:14.480]

fixed income, right, the next thing people worry about when

[00:28:16.880]

they wanna buy fixed income is what's gonna happen to yields.

[00:28:19.080]

Are their bonds gonna go up, down, is

[00:28:22.200]

that going to destroy my returns, which is what we saw in

[00:28:25.600]

2022 with the beginning of the Fed's hiking cycle,

[00:28:28.880]

a lot of returns were destroyed in long duration fixed income.

[00:28:32.440]

High yield is a shorter duration asset class.

[00:28:35.720]

The income stream really protects investors

[00:28:38.920]

quite a lot over time.

[00:28:40.560]

The underlying quality of our market has continued to improve

[00:28:43.720]

and evolve significantly over the last 10 years so the

[00:28:46.520]

inherent default risk is lower.

[00:28:49.280]

What's your forward return expectation on equity markets?

[00:28:53.360]

That's not my bailiwick but reading the sell side

[00:28:57.960]

pieces that are coming out for 2026 outlook in the next 10

[00:29:00.720]

years people are talking about projected equity

[00:29:04.280]

returns in the U.S.

[00:29:06.720]

of, surprise,

[00:29:09.920]

7 to 8%. Do you want 7% and 20% vol or

[00:29:13.120]

do you want 7% in  6, 7% vol?

[00:29:16.240]

We're going to leave it on that.

[00:29:17.680]

That's brilliant. Peter Khan, for Friday, you've given us a

[00:29:20.480]

lot to think about going into the weekend.

[00:29:22.080]

Thank you for joining us here today.

[00:29:23.880]

Pleasure to be here.

[00:29:25.520]

Thanks for watching or listening to the Fidelity Connects

[00:29:29.440]

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We'll end today's show with a short disclaimer.

[00:30:02.400]

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

[00:30:06.240]

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

[00:30:10.160]

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

[00:30:14.160]

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[00:30:16.720]

It is not an offer to sell or buy.

[00:30:19.040]

Or an endorsement, recommendation, or sponsorship of any entity or securities

[00:30:23.360]

cited. Read a fund's prospectus before investing, funds are not guaranteed.

[00:30:28.160]

Their values change frequently, and past performance may not be repeated.

[00:30:31.720]

Fees, expenses, and commissions are all associated

[00:30:34.160]

with fund investments.

[00:30:36.320]

Thanks again. We'll see you next time.