Emerging Market, High-End Consumers to Drive Retail Growth in 2012: Fidelity

Don’t rule out emerging market and high-end retail customers in 2012, according to a forward-looking analysis by Fidelity Investments’ Sector Portfolio managers. In coordinated press conferences this month, the managers pointed to numerous areas of growth they expect in the coming year.

Other areas that Fidelity’s managers expect strong growth, by sector: 

• Energy – new, more productive drilling techniques, more demand for liquid natural gas, a renaissance in deepwater exploration.
• Financials – bright outlook among Chinese banks, potential restructuring of government-sponsored enterprises (GSEs).
• Healthcare – deflationary business models, personalized medicine.
• Industrials – build up of infrastructure, more interest in energy efficiency.
• Information Technology – cloud computing, software as a service, more efficient use of “big data.”
• Materials – increasing demand for agricultural goods, low-cost chemical production in the U.S., return to gold as a reserve currency.
• Telecommunications – continued growth in wireless data consumption, more use of towers, further spectrum acquisitions.
• Utilities – stricter environmental regulations, abundant low-cost natural gas, alluring yield growth.

Fidelity manages $40 billion across 10 market sectors in 39 mutual funds that cover the gamut—from consumer discretionary to healthcare, energy, telecommunications, biotechnology, financials and more. The fund giant employs a total of 420 professionals to run its sector funds out of six major cities around the globe, including Boston, London and Tokyo.
“Many of Fidelity’s Select funds have largely outperformed their benchmarks over the long term, delivering alpha during various market cycles,” said Brian B. Hogan, president of Fidelity’s equity group. “By employing a deep, bottom-up global research process, Fidelity’s sector funds can provide investors the opportunity to invest within a specific segment of the economy, allowing for targeted exposure to certain industries and the potential to reduce some of the company-specific risk of investing in an individual stock.

“We believe our sector team can fine tune the Select Portfolios and set them up to own both the best ideas and take advantage of the biggest opportunities in a particular sector,” Hogan added.

Lee Barney writes for Money Management Executive.