Fidelity looks to macro uncertainty and the reassertion of fundamentals

Fidelity Worldwide Investment has published a White Paper looking into the impact of macro factors on investors over the past five years, and the evidence to suggest the beginnings of a shift towards fundamental factors.

“Market participants have had several quarters to improve their understanding of the major macro risks,”Fidelity Worldwide Investment said.

“Clarity related to the Eurozone, US ‘fiscal cliff’ and other systemic issues is likely to improve further. Already, there has been a fall in the spread of economic forecasts since 2010 and political uncertainty appears to have peaked.”

“The beginnings of a gradual shift in focus away from macro and policy is reflected in a decline in correlations, market fragility and an increase in average idiosyncratic risk, a trend we believe will persist and which presents an opportunity for fundamental investors.”

“Whilst broader risk on-risk off behaviour is unlikely to disappear altogether, we believe managers who remain wedded to a fundamentally driven investment thesis reflected in high active money, limit turnover and who strive to diversify portfolios in order to control absolute volatility have a better chance of success in the medium term.”

Click here to read the full White Paper:[asset_library_tag 6299, Top to bottom]

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