Rotation, risk and returns: Q4 ETF trends

What’s really driving ETF performance as we head into the final months of 2026?

With market momentum accelerating, Fidelity ETF Strategist Mark Verrilli takes a closer look at where investor capital is flowing and identifies sectors where he sees growth potential. He also gives his take on how higher interest rates, a risk-on environment and market concentration are influencing returns. Discover the key signals and trends that could impact your positions and gains into year-end.

Transcript

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<b>Subtitles are AI Generated</b>

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Hello and welcome to The Upside, I'm Nicole Dungy.

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Canada's ETF market is experiencing historic growth as investors seek

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investment options that offer greater transparency and diversification.

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Mutual funds may still dominate the market.

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However, more investors are moving beyond simply using ETFs

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as low-cost index trackers and instead are deploying them for portfolio

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construction and tactical asset allocation.

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In doing so, how should investors consider asset allocation,

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momentum, and active management when shaping their ETF strategies?

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And what risks and market themes should they consider?

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To talk about what does well in this environment, we have ETF strategist, Mark

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Borelli. Mark, great to have you here today.

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Thanks, Nicole. Of course.

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Why don't we start off with your role?

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So as an ETF strategist for Fidelity Canada, can you walk us through your

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day to day, how you interact with the team and our internal partners?

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Yeah, so I'd say that our role is really at the intersection of a lot of

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client-facing and product teams here at Fidelity.

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So we work closely with our portfolio management teams that design and trade

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on our ETFs. We work closely with capital markets teams to see

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what's going on in the landscape of the ETF industry, closely monitoring flows

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because that's often a leading indicator of investor preferences.

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And then we're trying to take some of the key takeaways from those two teams

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and present them to our sales teams for strategy purposes and

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also talking to our advisor clients about what products we think

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are going to be most relevant over the next couple of months, couple of years,

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and just providing portfolio construction ideas for their portfolios.

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So really we're sitting in the middle of a lot of different teams here at

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Fidelity. We get pulled in a lot directions, whether it's working with advisor

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sales or working with our institutional teams.

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But the idea behind this role is to really...

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Help everyone at Fidelity understand what's going on with ETFs and where we

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think things are going next.

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Okay, so you touched on flows there.

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Why don't we dig into that? International was obviously a big theme last year.

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Can you kind of give us an overview of what flows look like year to date and

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where we're seeing some trends? Sure thing.

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So ETF flows continue to be enormous on a net basis.

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We've seen over $90 billion so

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far this year into equity flows.

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Half of that has been international and global.

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So that train continues to run where a lot of investor preferences seem

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to be pointing away from the US.

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In my mind, any investor who's owned the US market has been

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rewarded greatly over the past 10 years.

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I think the flows for the last year and a half will tell us that investors are

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starting to broaden their horizons when it comes to geographic diversification

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of their academics.

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A couple of other areas that I think are really important to talk about with

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ETF flows are asset allocation has been a rapidly growing category.

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Asset allocation meaning many asset classes in different products into

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one packaged simple solution.

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So, a lot of investors have been looking for simplicity and diversification

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with asset allocation really growing.

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And then finally, another area of extreme growth with ETFs has been

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inverse products and alternatives.

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You know, we're seeing another bad year fixed income performance.

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This is going to be our third bad year in the last five years now.

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So, I think a lot advisors and investors are looking for

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alternative solutions to help diversify and broaden their portfolio.

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Because that safety net that fixed income has traditionally provided has been

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absent the past few years, particularly in 2022.

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So alternatives and inverse products and outcome oriented solutions are

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certainly on the rise as well.

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Okay, I want to definitely touch on the multi-asset strategies

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shortly, but before we do, we've seen big milestones in the Canadian

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asset management space, but specifically relating to ETFs.

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For example, ETFs have gone from 13% of the asset management

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industry in 2021 to almost doubling to about 25%

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as of July 2026.

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Said another way roughly $1.04 sits in an ETF

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currently. And looking at the charts, that growth isn't slowing, it's

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accelerating. Can you touch on why we're seeing this rise in popularity with

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ETFs and kind of what's driving these flows?

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We'll get into the growth engine of ETFs, but first I wanted to just talk a

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little bit about the lines becoming increasingly blurred between ETF

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and mutual fund. I think there's a lot of gaps in investor education

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when it comes to the two vehicles.

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People still automatically associate ETF with passive and mutual

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funds with active, and that's not necessarily the case.

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You can get a wide range of management styles in both.

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So to me, the conversation should not necessarily be.

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ETF versus fund, but it's certainly one that comes up a lot in my day to day

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role and within the industry.

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You can have an actively managed ETF that is more expensive than a

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passively managed mutual fund.

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So there is a little bit of a difference between management style and vehicle.

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That being said, mutual funds are still attracting a lot of flows on a gross

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basis, but not on a net basis.

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They're seeing a lot redemptions as well.

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They've had four more decades of opportunity to gather

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at UM. Which means a lot of the people that own those units are

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also in an older demographic.

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And naturally they're going to have a higher redemption rate, right?

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They're starting to spend some of their money in retirement.

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So it's a little bit different. But with ETFs, you know, going back to what

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your question asked, like what's really driving the growth, I like to call it

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the three P's, perception, price, performance, the three Ps.

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Perception being what we talked about where a lot investors automatically

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associate ETF with low cost, transparency.

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And so on. I think that has more to do with management style than the vehicle,

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but perception is playing a huge role. There's so much advertising around ETFs

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now. If you're watching, you know, football game, a hockey game, a basketball

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game, like you're bound to get some commercials on ETFs.

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Robo advisors are obviously becoming a lot more popular.

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DIY investing is becoming a little more popular and these platforms were built

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on ETF's, right?

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Like the Wealthsimples of the world, the Quest trades of the word.

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You know, your TD direct, like a lot of these platforms are really built around

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ETFs. So that's certainly contributing to the perception around

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needing to use this vehicle.

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And their TPs, price and performance.

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Well, you can have a wide range of management styles and ETFs, you know a lot

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of the assets still do sit in passive products.

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Factor is certainly a rapidly growing category and that's what we do here at

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Fidelity with a lot our ETFs and those two categories tend to be less expensive

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than your traditional actively managed portfolios.

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With more pressure coming around reducing costs in advisors' portfolios.

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Those management styles through an ETF vehicle are certainly becoming more

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popular. And then finally, performance.

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You know, I kind of alluded to it earlier, you've been rewarded for just owning

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the market, essentially in the U.S.

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Since the great financial crisis.

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We're starting to see more broadening within markets, you know,

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more broadending with leadership in the US, more broad ending with different

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regions contributing excessively to returns over the past couple of

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years. So with that, performance is really changing amongst

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products, product providers, and management styles.

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So I think we're starting to see a lot more newer categories of ETFs become

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popular because performance has been really strong in areas like factor,

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or even areas like active and alternative.

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So putting it all together, you know, industry perception, lower

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cost typically, and strong performance across, you now,

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an innovative suite of products, all contributing to increased flows and

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ETFs.

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To build off that conversation, why don't we kind of dive into the overall

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differences between passive and factory TFs that we do at Fidelity Canada?

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Sure.

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So I'll start off by saying every ETF follows

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some sort of rule in order to figure out how much

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weight each stock is going to be within the underlying index.

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For most ETFs that are passively managed, that rule is just

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market cap. The bigger the stock in the investment universe, the

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bigger the weight will be in your portfolio.

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Factor ETFs, I think, just ask the question, is this the most efficient

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way to build portfolio.

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Organising by something other than market cap can not lead to better client

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outcomes. With factor investing, we think it can.

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So factors will look at characteristics like valuation or quality

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of your balance sheet or your momentum in recent performance

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or perhaps your volatility profile.

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And we think that creating an index or an ETF that organises

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by these characteristics can lead to stronger risk adjusted returns.

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So using value as a really simple example, a value ETF would say, you know

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what, Let's look at. Valuations of companies and companies that appear to be

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cheaper will be given more weight in the portfolio.

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And in the long run, we think that could lead to better performance.

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So while both follow rules, I would argue that there's

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a thesis behind investing with factors for every stock chosen

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in a portfolio, whereas a passive strategy is just give

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me the market and the market is by biggest company, his biggest weight.

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Again, that's been a great strategy for.

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You know, most of the last 10 years, but with markets broadening and

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leadership changing over the past six months, I think that we might start

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to see some shifts towards other types of management styles.

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Right.

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Let's double click onto the value piece.

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So fidelity value factor, can we compare that to other

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competitor value factors and kind of where the differences lie?

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Sure, so there's a lot of companies out there that do factor investing.

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Fidelity is not the only one. In fact, the research was really pioneered in the

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70s by two guys, Eugene Tham and Kenneth French, the Tham, a French factor

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model, really built on having betas to

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different characteristics like value.

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Their broad definition would use price to tangible book as a measure

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of value. Tangible book meaning, you know, what are my hard assets worth in my

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business? The challenge with using tangible book value

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is you would never invest in a sector like tech, because tech companies don't

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necessarily have a lot of tangible assets.

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They have a lot of intangible assets within their balance sheet.

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This is a great year to use an example, especially in Canada.

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Software really got hurt in Canada at the beginning of the year because

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the market started to price these companies down, thinking that AI

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would eventually just take over software.

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There wouldn't be a need for it anymore.

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These stocks get crushed.

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Valuations come down substantially.

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If you're looking at only tangible book value, you're not going to invest in

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these companies. But with us at Fidelity, we take a more sophisticated

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approach to the characteristics we use to measure value.

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We look at all three financial statements, we look at measures from the past,

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the present, and the future.

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So when an opportunity arises like this in tech, we can take advantage

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of that within our Canadian value ETF as an example.

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So I'd like to say... We augment the academic research

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done by family and French with fundamental research done here at Fidelity.

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Can we lean into what our portfolio managers have done really well for 40 or

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50 years? Can we try and quantify that approach in order to improve

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on, you know, the traditional family and french factor model?

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Okay.

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And I guess just one last piece on that, what that leads to

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in our process there with factors is it leads to no underlying biases.

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Is that correct?

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Yeah, that's a good point to bring up.

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When you're buying a factor product at Fidelity, we're trying to give you that

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peer factor exposure.

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So this year, values become a bigger conversation because of

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increasing market concentration in the US, right, AI has dominated returns,

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big tech has dominated the returns, and those stocks are now a huge part of the

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index. Some people look at that as a potential area of risk.

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So how do we get away from that area of market concentration?

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Wall. Something like an equal weight index has come up a lot in my

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conversations with advisors.

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The challenge with using something like equal weight, where you're giving equal

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weight to every stock in the S&P 500, is you're going to bring down

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your quality, meaning you're gonna have more companies with worse balance

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sheets. You're gonna be bringing down your market cap.

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Your size is going to become significantly smaller because the index is so

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skewed towards large megacap companies and you're going to

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be decreasing your momentum.

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So you're taking a bet against what's worked well recently.

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With our factor approach, we're trying to give you pure exposure, meaning we're

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only trying to reduce valuation risk with the value ETF.

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We're not trying to bet against size or bet against momentum or bet again

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quality. So we take steps behind the scenes when we're designing these products

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to make sure that those things stay neutral or just betting on valuations.

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I think that's potentially a more prudent approach to try and be more targeted

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with your outcomes. Rather than just buying a broad-based product

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for the sake of it.

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Can you give us a snapshot of the

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market landscape today, I guess, what are the key themes and trends that are

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shaping the environment right now, and then we can kind of dive into a few

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different overlying product ideas that come from that.

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Sure. We talked about the US already.

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AI is certainly dominating the theme here in the US

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market. In Canada and international markets, it's a little bit different.

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What I'll say off the top is all three regions have experienced pretty

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substantial returns so far this year.

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Double digit returns in the 10% to 14% neighbourhood.

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I think most investors would be pretty happy with that if they could get that

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every year, but they've done so in very different ways.

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In Canada, we're really benefiting from higher commodity prices.

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The price of gold rose substantially last year.

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We're seeing the price of oil reach year-long highs because

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of the war in Iran.

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And although that could be bad for inflation, it's good for Canadian

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oil companies, right? So we're seeing pretty strong growth.

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Performance out of the commodity producers.

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We've also seen a large recovery from banks in Canada.

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I think the narrative going into the year in Canada was that we could be on the

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doorstep of a possible recession.

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I think that narrative has changed substantially over the last seven months,

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and that's really been reflected in improving performance of banks here in

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Canada in international markets.

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Again, it's a little bit of a different story.

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It's not necessarily commodities, it's not necessarily AI.

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It's more or less recovering.

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Of old economy sectors in Europe and reform in

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Japan. So with all of the conversations around

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tariffs in the U.S.

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Potentially threatening to leave NATO, we saw countries in Europe start to

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invest a lot more in defence and infrastructure and how it really helped boost

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performance in those sectors.

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And in Japan, we've seen a lot of reforms around corporate governance,

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we see a lot more share buybacks, we have seen increasing dividends.

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So that has really helped boost performance in that.

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Region, which is a huge part of the EFI universe.

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So strong performance in Canada, strong performance the US, strong performance

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in EFI or international markets, but all doing so in very different ways.

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Okay.

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Interesting. So I guess, touching on the US story,

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obviously US markets have been very strong this year.

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For investors that might want to take some risk off the table in terms of

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concentration risk within the AI sector and just to make seven,

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can we touch on the value factor and specifically how that might be able

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to diversify a client's portfolio?

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Sure. So we already talked a bit about value and how the idea is to reduce

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valuation risk.

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Valuation risk meaning the valuations of the hyperscalers

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has gotten substantially higher over the past year and a half or two years

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as we've seen really strong performance from anything attached to that theme

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of AI. So when I speak with a lot of advisors in my role

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in day-to-day, they're increasingly concerned that the performance

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of their portfolios is becoming really dependent on just a handful of stocks.

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So when they say they want to reduce valuation risk or reduce concentration

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risk, it really means can I own things that are different from

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the same five or 10 stocks?

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And that's the whole idea with something like our US value ETF

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is to try and provide a portfolio that looks a lot different from your

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typical US equity portfolio.

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It's picking stocks based on valuation characteristics, meaning do we think

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the fundamentals are trading cheaper than their intrinsic value, or do we

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really think the stock is potentially going?

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This allows you to invest in sectors that look a lot different from a typical

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US equity portfolio, which is heavy in AI and heavy in tech, and instead to

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be heavy in other areas like real estate, utilities, materials.

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This provides a great layer of diversification.

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I think that word is thrown around a lot in our industry.

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I think diversification is a lot different now than it was even just

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five years ago.

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Concentration in tech is rising in a lot of markets, not just the US, but we're

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seeing it internationally.

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Taiwan and Korea are great examples where three stocks have been responsible

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for three quarters of the emerging market returns in the last year.

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Diversifying regionally does not necessarily mean you're diversifying your

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portfolio because he still might have a lot of bets on AI.

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So I think that factor diversification is becoming an increasingly more

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important topic. Our US value factor is one way to help

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diversify the typical portfolio that's been reliant on just a

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handful of stocks. And we think that's a really exciting opportunity over

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the next six to 12 months.

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Whether or not it leads market performance is a totally different question.

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None of us really have a crystal ball. But we think the idea of diversifying

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through different factors is really important.

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In order to create, you know, well-constructed portfolios.

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Right. Okay.

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Before we dive into multi-asset ETFs, touching on that diversification

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piece, why don't we – you mentioned oil prices impacting inflation.

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Can you just kind of give us an overview of what's going on

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with rates on both sides of the border, specifically in North America?

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Yeah, so we're taping this episode in mid-September.

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So we've had a central bank decision in Canada.

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We're waiting on the US central bank decision, which I think is kind

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of the more exciting topic to talk about today.

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Only a couple of weeks ago, it was kind of a coin flip if there

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would be a hike in the US in September.

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When I looked this morning, it was about 95% probability.

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So, interest rates are probably going up in the US.

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By the time this episode comes out, they'll probably have already gone up in

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US, which impacts the short end of the curve, meaning

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00:19:18,690 --> 00:19:22,661

things like what you're borrowing from the bank on a

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00:19:22,661 --> 00:19:24,863

short-term basis, credit card rates, that sort of thing.

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Those interest rates probably are going to go up and lockstep.

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On the long end of curve, we've already seen a lot of increases in interest

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rates in the U.S. Market in particular.

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You know, the 30-year... Curve is at multi-decade highs in the

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U.S. This is increasingly becoming a concern for the U S administration

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because they have to roll over a lot of debt over the next couple of years

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and they don't want to have to rollover that debt at a higher rate.

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I think frivolous spending has been a big factor contributing to

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00:19:55,093 --> 00:19:56,795

higher interest rates.

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The war in Iran possibly leading to more inflation risk is certainly

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contributing to a higher interest rates, that's leaking into.

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Other areas around the world as well.

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But I think the U.S. Market in particular has seen some pretty negative

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impacts on rising rates compared to other major developed

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economies. So that's something that we're keeping an eye on.

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It's something our quantitative team talks a lot about.

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And I think it's something can help contribute to wanting to own something

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like value in this environment because when interest rates are

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going up, when inflation and sticky.

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00:20:32,564 --> 00:20:35,667

You know, valuations can come under pressure, right?

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You know, think about it from this lens. If you're a company and you're

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00:20:38,270 --> 00:20:42,741

borrowing money to build a new data centre and that borrowed money

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00:20:42,741 --> 00:20:46,845

is becoming more expensive, well, the market is going to

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say, you know what? Maybe we shouldn't be giving them such a generous valuation

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going forward. So valuations come under a pressure that can create

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a really good environment if you're less exposed to valuation risk.

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00:20:59,524 --> 00:21:01,693

And the last thing that we're really watching on it more.

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00:21:01,693 --> 00:21:05,664

Macro level spending, CapEx has obviously gone up

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substantially with this AI data centre build out and

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00:21:09,635 --> 00:21:12,371

infrastructure build out.

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00:21:12,371 --> 00:21:16,074

Questioning the sustainability of these practises I think is on a lot of

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00:21:16,074 --> 00:21:17,843

investors' minds.

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00:21:17,843 --> 00:21:21,880

We're starting to see Meg 7 companies issue bonds, which is pretty rare for

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them. They're starting burn through these massive piles of

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00:21:25,851 --> 00:21:29,788

cash that they've amassed over the past decade of selling a lot of their

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product. It's definitely not a problem right now.

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They have a lot of cash. They've been extremely successful companies.

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But if we don't see the return from some of these projects in

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AI in the near term, then perhaps we'll have to rethink how much money they're

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spending. So that's certainly something that we're watching closely.

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00:21:48,040 --> 00:21:50,976

Okay.

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00:21:50,976 --> 00:21:55,147

If we take a look at the top 10 selling ETFs, three of those

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00:21:55,147 --> 00:21:59,651

are multi-asset strategies, including our own Fidelity All-in-One's.

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00:21:59,651 --> 00:22:02,721

Can you give us an overview, number one, of the sweep, but then also what's

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00:22:02,721 --> 00:22:06,258

driving investors to these one-ticket solutions?

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00:22:06,258 --> 00:22:10,762

And to even expand on that, I believe it's five of the top 12 selling ETFs

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are asset allocation.

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00:22:12,664 --> 00:22:16,301

So if you look at the top selling products in Canada, like asset allocation is

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00:22:16,301 --> 00:22:21,239

definitely there. Fidelity All-in-ones would be three of those five products.

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00:22:21,239 --> 00:22:26,044

So with our All-In-One suite, the idea is you're really buying diversification,

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00:22:26,044 --> 00:22:27,779

and I mean that in a few ways.

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00:22:27,779 --> 00:22:32,651

Regional diversification. Exposure to Canada, U.S., and international markets.

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00:22:32,651 --> 00:22:36,588

Factor diversification... Which again, I think is increasingly more important

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00:22:36,588 --> 00:22:39,024

as markets become more concentrated.

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00:22:39,024 --> 00:22:43,161

So buying momentum, low volatility, value, and high quality

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00:22:43,161 --> 00:22:47,366

across those regions and asset allocation, diversification,

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00:22:47,366 --> 00:22:51,470

as is implied by the name of the category, meaning you're buying equities,

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00:22:51,470 --> 00:22:56,208

you're buy bonds, you're a little bit of alternative exposure as well.

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00:22:56,208 --> 00:23:00,245

So the idea here is simplicity and diversification a

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00:23:00,245 --> 00:23:04,116

one ticket solution. Investors can own just this product.

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00:23:04,116 --> 00:23:08,620

As they're, you know, mainstaying their portfolio and be well diversified.

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00:23:08,620 --> 00:23:12,391

So no matter what leads the markets over the next 12 months, hopefully they

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00:23:12,391 --> 00:23:15,293

have something that's participating and hopefully they'll have something that's

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00:23:15,293 --> 00:23:18,797

helping provide some defence if things don't go as well.

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00:23:18,797 --> 00:23:22,868

So I think the all-in-ones are a really great solution for people who are

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00:23:22,868 --> 00:23:26,171

starting out investing or if you're thinking about, you now, a registered plan

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00:23:26,171 --> 00:23:30,208

or a smaller account where it might not make sense to have a lot of complexity

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00:23:30,208 --> 00:23:32,477

within your portfolio.

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00:23:32,477 --> 00:23:36,481

I think that a lot of investors in Canada would really agree with that notion

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00:23:36,481 --> 00:23:41,219

of simplicity and diversification becoming increasingly important.

404

00:23:41,219 --> 00:23:45,323

We talked about earlier some of the structural changes in the industry, DIY

405

00:23:45,323 --> 00:23:49,361

becoming a lot more accessible,

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00:23:49,361 --> 00:23:52,998

robo-advisory companies becoming a little more accessible.

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00:23:52,998 --> 00:23:57,235

Even within the advisor industry, there's been a big shift towards

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00:23:57,235 --> 00:24:00,071

ETS because of some the structural changes that make.

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00:24:00,071 --> 00:24:02,941

ETFs more accessible for certain dealers.

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00:24:02,941 --> 00:24:05,110

A lot of advisors are moving to discretionary platforms.

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00:24:05,110 --> 00:24:08,947

A lot advisors are moving to model portfolios and with their smaller accounts

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00:24:08,947 --> 00:24:11,983

they wanna do something that's a little bit more simple.

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00:24:11,983 --> 00:24:15,921

So all of these things point towards asset allocation ETFs continuing to

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00:24:15,921 --> 00:24:17,622

become more popular.

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00:24:17,622 --> 00:24:21,126

In fact, when we look at the past seven years, there's never been a negative

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00:24:21,126 --> 00:24:25,163

month of net inflows for asset allocation, ETFs,

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00:24:25,163 --> 00:24:28,133

which cannot be said about any other ETF category.

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00:24:28,133 --> 00:24:30,235

So it's very sticky money.

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00:24:30,235 --> 00:24:32,671

When investors buy them, they stay in them.

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00:24:32,671 --> 00:24:37,042

I think that makes them very attractive for both investors and advisors.

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00:24:37,042 --> 00:24:40,111

The end of the day, the name of the game is really stay in the market.

422

00:24:40,111 --> 00:24:42,981

We can talk a lot about where we think things are going.

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00:24:42,981 --> 00:24:45,183

We're probably gonna be wrong on a lot of those things.

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00:24:45,183 --> 00:24:48,119

That's just how it goes with investing.

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00:24:48,119 --> 00:24:51,890

With asset allocation ETFs, because you're participating in a wide range of

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00:24:51,890 --> 00:24:54,526

markets, makes it a little bit easier to stay in game.

427

00:24:54,526 --> 00:24:56,027

I think, that's really important for investors.

428

00:24:56,027 --> 00:24:58,663

Yep, for sure. I just want to touch on one piece there.

429

00:24:58,663 --> 00:25:01,366

You mentioned alternatives as a piece of the portfolio.

430

00:25:01,366 --> 00:25:05,303

Can you kind of give the audience an overview of what that means, specifically

431

00:25:05,303 --> 00:25:09,374

it's crypto exposure, but why did that get included in the portfolios

432

00:25:09,374 --> 00:25:10,809

and what does it do?

433

00:25:10,809 --> 00:25:14,546

So alternatives can mean a lot of different things in investing, which I think

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00:25:14,546 --> 00:25:18,250

can be a bit of a point of frustration for the average investor.

435

00:25:18,250 --> 00:25:21,152

It's really important to do your research when you're investing on alternatives

436

00:25:21,152 --> 00:25:25,290

because there's a lot of different you can do with derivatives,

437

00:25:25,290 --> 00:25:29,794

with commodities, with margin, whatever it may be that

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00:25:29,794 --> 00:25:33,031

really changes the investor experience.

439

00:25:33,031 --> 00:25:36,535

For us in the all-in-ones alternative exposure, as you mentioned, is crypto

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00:25:36,535 --> 00:25:39,437

through a Bitcoin ETF offering.

441

00:25:39,437 --> 00:25:43,174

The reason why we included crypto is because we just wanted something that

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00:25:43,174 --> 00:25:47,212

behaved differently from equities and fixed income.

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00:25:47,212 --> 00:25:51,249

If you ever study portfolio management 101, you'll know

444

00:25:51,249 --> 00:25:55,220

that if you have assets with lower correlation to one another,

445

00:25:55,220 --> 00:25:59,190

it helps improve your risk adjusted returns in the long run.

446

00:25:59,190 --> 00:26:02,961

All that to say, if crypto moves a little bit differently than bonds, and it

447

00:26:02,961 --> 00:26:07,032

moves a bit differently than equities, and it goes up in the longer run.

448

00:26:07,032 --> 00:26:10,468

Which should help improve risk adjustment returns in our portfolios.

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00:26:10,468 --> 00:26:13,939

And the nice thing about something like crypto is you can do it at a pretty low

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00:26:13,939 --> 00:26:17,976

cost. So it's a really cheap way to access alternatives in

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00:26:17,976 --> 00:26:21,813

the portfolio. Now the second reason for inclusion I would say is because we

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00:26:21,813 --> 00:26:25,750

use those factors that have a defined investment thesis, our

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00:26:25,750 --> 00:26:28,153

portfolias tend to be a little bit more defensive.

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00:26:28,153 --> 00:26:32,157

So if we wanted to bring up our correlation to some of the other major

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00:26:32,157 --> 00:26:36,094

asset allocation ETF providers in Canada, we needed a little bit more risk

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00:26:36,094 --> 00:26:40,098

in the portfolio. Bitcoin also offers a little bit more risk.

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00:26:40,098 --> 00:26:44,502

So it helps keep us in line with how those portfolios behave in

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00:26:44,502 --> 00:26:48,373

the long run, but still giving us a differentiated source of returns.

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00:26:48,373 --> 00:26:51,776

Okay. So it's not meaningfully driving performance in one way or the other, but

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00:26:51,776 --> 00:26:55,847

it's over time increasing, slightly increasing risk adjusted returns.

461

00:26:55,847 --> 00:26:58,783

Since we launched, it's certainly helped performance.

462

00:26:58,783 --> 00:27:02,087

I know that this year has been a more challenging year for cryptocurrencies.

463

00:27:02,087 --> 00:27:05,490

Last month, we saw a bit of a changing narrative there with really strong

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00:27:05,490 --> 00:27:07,158

performance.

465

00:27:07,158 --> 00:27:10,729

It has helped our performance, but it's not the only thing driving performance.

466

00:27:10,729 --> 00:27:13,131

It's a contributing factor. Right.

467

00:27:13,131 --> 00:27:15,033

Awesome. Well, thank you Mark for being here.

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00:27:15,033 --> 00:27:16,101

We appreciate your time.

469

00:27:16,101 --> 00:27:18,436

Thanks for having me on. Of course.

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00:27:18,436 --> 00:27:20,572

Thank you for joining us on the upside.

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00:27:20,572 --> 00:27:24,843

For more investor content, sign up to our Zoom webcast on fidelity.ca

472

00:27:24,843 --> 00:27:26,945

and go to our insights tab.

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00:27:26,945 --> 00:27:30,215

You can also sign up for our newsletter on the website so you never miss an

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00:27:30,215 --> 00:27:34,552

episode. And remember, working with a financial advisor is the best investment

475

00:27:34,552 --> 00:27:36,855

you can make on your financial journey.

476

00:27:36,855 --> 00:27:39,290

Thank you joining us and I'm Nicole Dungy.

477

00:27:55,907 --> 00:27:57,308

Thanks for listening to, or

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00:27:57,308 --> 00:27:58,977

watching, Fidelity Canada's The

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00:27:58,977 --> 00:28:00,311

Upside Podcast.

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Rotation, risk and returns: Q4 ETF trends

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