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Investment OutlOOkFidel i t y Personal Inves t ing ’s marke t and inves tment v iew

April 2016

“The first few weeks of 2016 were volatile as investors weighed a new interest rate environment and commodity weakness. As the market matures and we no longer rely on a rising tide lifting

all boats, stock selection and active management will become more important.”

By tom stevenson, Investment Director

In this issue: ■ Oil outlook remains key

driver of equity sentiment

■ Markets bounce back from bear market territory

■ Contrarians start to sense value in emerging markets

■ Fidelity analysts measure weaker sentiment

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Important information: Please be aware that past performance is not a reliable indicator of what might happen in the future. the value of investments and the income from them can go down as well as up and investors may not get back the amount invested. When investing in overseas markets, changes in currency exchange rates may affect the value of your investment. Investments in small and emerging markets can be more volatile than those in other overseas markets. Reference to specific securities or funds should not be construed as a recommendation to buy or sell these securities or funds and is included for the purposes of illustration only. this information does not constitute investment advice and should not be used as the basis for any investment decision nor should it be treated as a recommendation for any investment. Investors should also note that the views expressed may no longer be current and may have already been acted upon by Fidelity. Fidelity Personal Investing does not give investment advice. If you are unsure about the suitability of an investment, you should speak to an authorised financial adviser.

executive summary

Please note the views in this document should not be seen as investment advice. If you are unsure about the suitability of an investment, you should speak to an authorised financial adviser.

Asset classesCurrent View

3 Month Change

Equities the market cycle is maturing but equities remain preferable to bonds in a lower-for-longer world. Few bear market alarm bells are yet ringing.

Bonds the sweet spot in fixed income is narrowing. Investment grade corporates look to be more attractive than Government bonds or high yield.

Property the property cycle is maturing and europe may do better than the uk this year. Both will benefit from still rising rents and reasonable capital values.

Commodities Oil looks to have more upside potential than industrial commodities, which still face too much supply. But gains could be capped if capacity re-emerges.

Cash During the recent volatility it has paid to have some cash at hand to buy the dips. that remains the case today.

Equity regions

Current View

3 Month Change

US the us market has run out of steam as high valuations look stretched versus flagging earnings growth. still a core holding, though.

Japan Japan has been used as a punch-bag by investors worried about a China crisis. Fundamentals are better than recent market performance suggests.

UK the risk of Brexit creates uncertainty but the correction since last year’s high means valuations are reasonable and dividends are supportive.

Europe valuations are neither too high nor too low despite two years of disappointing performance. Growth and inflation may surprise on the upside, however.

Asia Pacific ex-Japan Investing in Asia is all about stock-picking and playing the long-term. China is

risky but cheap, India is more attractive but it’s in the price.

Emerging markets Although risks are still significant, valuations, sentiment and potential catalysts

for change should start to interest contrarians.

three month Change: the direction of the arrows indicates any change in the view since the previous Investment Outlook.

For more market data including full 5 year performance figures see page 12

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Acknowledgements I would like to thank the many knowledgeable and experienced people within the wider Fidelity organisation who have helped me develop the ideas in this Investment Outlook. Although the views expressed here do not represent the shared opinion, or house view, of Fidelity’s investment team, the combined expertise of over 380 investment professionals in 13 countries is a very significant resource on which I have been able to lean. In particular, I would like to thank kevin O’nolan in Fidelity solutions; Paras Anand and Richard lewis, respectively the Heads of european and Global equities; Jeremy Osborne, Investment Director in tokyo; matthew sutherland, senior Investment Director in Hong kong; Alex Homan, Investment Director, emerging market equities; matthew Jennings, uk Investment Director; Curtis evans, Investment Director in our london-based Fixed Income team; and neil Cable, who heads Fidelity’s Real estate investment team.

Q1 2016: a bumpy start to the year

Oil’s dramatic round tripOil is an important cost for businesses and consumers. that means a low price should be a positive. But the oil price is also an important barometer of global economic health. As a result, it can sometimes move in lock-step with equity markets. that’s been the story of the first three months of 2016 – shares and Brent crude have been highly correlated and both have been a reflection of the ebb and flow of growth fears. Once investors saw the glass half full again in the middle of February, an oil price in the mid-$20 range looked ridiculous and the price bounced back sharply. the question now is how far it can go. much of the shale production that’s been shut down recently can be quickly switched back on again. that is likely to put a ceiling on the oil price – perhaps in the $50-$60 range.

25

30

35

40

Oil

'14

'07

'29

'22

'15

'08

'01

'25

'18

'11

'04

'28

'21

'14

Dec 15 Jan 15 Feb 15 Mar 15

US$

per

barr

el

source: thomson Reuters Datastream, as at 21.3.16 in local currency terms

5,200

5,400

5,600

5,800

6,000

6,200

6,400

6,600

6,800

7,000

7,200

Mar-1

5

Apr-1

5

May-

15

Jun-

15

Jul-1

5

Aug

-15

Sep-1

5

Oct

-15

Nov

-15

Dec

-15

Jan-

16

Feb-1

6

Mar-1

6

FTSE 100

-22%

source: thomson Reuters Datastream, as at 21.3.16

30

35

40

45

50

55

60

65

70

Mar-0

6

Mar-0

7

Mar-0

8

Mar-0

9

Mar-1

0

Mar-1

1

Mar-1

2

Mar-1

3

Mar-1

4

Mar-1

5

Mar-1

6

Dividend payout ratio


The bear growled – but only brieflythe uk market’s slide since last April briefly passed into unofficial bear market territory after prices fell by more than 20% from the previous peak. the Ftse 100 has experienced this kind of fall a dozen or so times since the index started in 1984. these bear markets fall into two broad categories – pauses for breath in an ongoing bull market and down-legs in a more serious market collapse. the latter type needs one of two triggers – either valuations were excessive at the previous peak (think dot.com bubble) or the economy was heading into recession (2008 was a good example of this). neither really applied in April 2015 so (touch wood) the latest 20% pull-back looks like a pause for breath in a (maturing) bull market.

Dividends in focus: can yields be trusted now?In a low-growth, low-interest-rate world, equity income has been a blessing for yield hungry savers and investors. many blue-chip companies have offered high and sustainable dividends – when re-invested, those pay-outs have been a major contributor to total returns. Dividends have been in focus during the first quarter of 2016 for good and bad reasons. Companies are now paying out more of their profits in the form of dividends, as the chart shows, raising fears that they might be cut. Reassurance on the pay-out helped shell bounce back from its recent low and lloyds is back as a reliable income payer again. BHP Billiton, though, bowed to the reality of the commodity cycle and said it could no longer promise a steadily rising pay-out. From now on, if profits fall so too will the dividend.

Past performance is not a reliable indicator of what might happen in the future. When investing in overseas markets, changes in currency exchange rates may affect the value of an investment. For full 5 year performance figures please see page 12.

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Focus: the view from the bottom up

Investing in innovation

75

100

125

150

175

200

225

Mar-0

7 –

Sep-0

7 –

Mar-0

8 –

Sep-0

8 –

Mar-0

9 –

Sep-0

9 –

Mar-1

0 –

Sep-1

0 –

Mar-1

1 –

Sep-1

1 –

Mar-1

2 –

Sep-1

2 –

Mar-1

3 –

Sep-1

3 –

Mar-1

4 –

Sep-1

4 –

Mar-1

5 –

Sep-1

5 –

Mar-1

6 –

MSCI IT MSCI Pharma and Biotech MSCI World total

Weighted average earnings (rebased to 1.1.07)

source: thomson Reuters Datastream, as at 21.3.16.

Past performance is not a reliable indicator of future returns. When investing in overseas markets, changes in currency exchange rates may affect the value of your investment.

I like to think that investing through Fidelity Personal Investing provides the best of two worlds. As an “open architecture” fund platform, we can offer access to hundreds of funds from dozens of different investment houses. But as the distribution arm of a long-established investment manager, we also benefit from years of accumulated market experience and access to one of the industry’s best-resourced teams of analysts and portfolio managers.

each year, we tap into the insights those 400 or so investment professionals glean from an estimated 17,000 meetings with the managers of the companies Fidelity invests in. the team actively researches over 80% of the world’s market capitalisation to come up with buy and sell recommendations for our portfolio managers. that’s a deep well of proprietary information.

this year’s analyst survey is just out so I thought I would use this quarter’s Focus feature to explore the latest findings. Hopefully, this bottom-up view from the corporate coal face will flesh out the top-down macro-economic and market views in the rest of this Outlook report.

Our analysts are asked to report on what they are hearing from the companies they cover in five key areas: management confidence, dividends, capital expenditure, balance sheets and industry returns. the questions are forward looking so they reflect what analysts expect to happen over the next 12 months. We measure responses on a scale that positions 5 as neutral with a low number indicating a significant worsening of the outlook and a high number a significant improvement.

the over-arching message from this year’s survey is that sentiment is noticeably softer than in the two prior years. the mood is centred on the half way mark suggesting that things are not getting much worse nor improving either. Only Japan, still scores significantly above 5 this year. last year all the developed countries were above the mid-point. emerging markets display a wide range, with Asia excluding Japan and China doing the best. China is below the Asian average while emerging europe and latin America are the areas with the worst sentiment.

When you look into the sector detail it’s not hard to understand why the regions divide as they do. the sectors with the best outlooks are those in which developed countries are strongest – information technology, consumer staples, healthcare, telecoms, consumer discretionary and financials. On our 0-10 range, all of these score above 5. However at the other end of the scale, the sentiment scores for energy, materials, utilities and industrials are all well below neutral.

A couple of key themes emerge from the sector analysis. A clear divergence is developing between what might be called ‘old’ economy sectors – those engaged in heavy manufacturing to put it crudely – and ‘new’ economy sectors in innovation-driven areas like technology. this in turn is driving a wedge between the developed and developing world.

Of all the regions, Japan currently shows the greatest scope for improvement. Analysts see the benefits on the ground of the Abenomics programme while characteristically Japanese themes like ageing are starting to be seen as an opportunity (think robotics) as much as a threat.

In the us, growth is becoming harder to come by and more dispersed too. Areas with better growth potential, like healthcare

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and It, are outperforming. the us is more dependent than most on the consumer and while the consumption backdrop is improving this poses a risk if spending does not come through as expected

In europe, companies are responding to a low-growth environment by seeking to buy market share. With super cheap money from the eCB, that trend is likely to continue. Finally, China is a key focus for Fidelity’s analysts. Here they see a tale of two economies. the country’s northern industrial heartlands are suffering but southern, service-focused businesses continue to see strong growth. there are lots of investment opportunities but the road ahead could be bumpy is the conclusion.

A few sector and industry-specific themes have also emerged from the 2016 survey. the first is that capital expenditure is being hit by recent over-investment and the emergence of new capital-light industries in which companies are able to produce more output with less need for heavy equipment. this is a variant of the old economy/new economy theme which makes a strong case for active research-driven investment rather than just buying a whole index of stocks.

A related theme is the way in which innovation is becoming a key driver for investors. Few sectors are immune to the impact of new technology and the disruptions this can cause create both winners and losers. to see the effect innovation can have on investment portfolios you only need look at the chart opposite

which shows how the earnings of the It and pharma/biotech sectors have massively outperformed the rest of the stock market in recent years.

the third theme emerging from the survey is focused on the consumer which is becoming the principal engine of growth in the developed world. Consumption sectors are unusual in faring better in this survey than in recent ones. Here too, though, investors need to tread carefully because innovation and disruption are shaping these markets too. the growth of Amazon at the expense of traditional bricks and mortar retailers is just the best-known example of this shift.

A final sector theme is in financials. this sector is changing rapidly as balance sheets strengthen and borrowings reduce. light is shining at the end of the financials tunnel seven years after the crisis. But there are significant risks too including lower interest rates, which squeeze profit margins, and poor liquidity in some key financial markets.

Overall then a mixed picture emerges from Fidelity’s 2016 analyst survey. Generally, sentiment is softer which argues for some caution as the post-crisis bull market enters its eighth year. As ever, however, change creates opportunity for investors who are supported by in-depth and wide-ranging research. success in today’s markets is largely about spotting the winners and avoiding the losers in a fast-changing world.

economic Outlook ■ Global recession fears look overdone ■ Question marks over effectiveness of central banks ■ Recession and inflation remain opposing tail-risks

Global economic growth is positive but unexciting. Consumption is underpinned by improving jobs markets, low energy prices, stronger domestic balance sheets and firm housing markets. In the commodity-consuming economies that combination should be enough to offset tepid business confidence and volatile markets. emerging markets need commodity prices to at least maintain their recent stability.

Central-bank policy remains key, with divergence between the Federal Reserve’s tightening bias and the continuing easing in europe, Japan and, to lesser degrees, in China and the uk. the mood music in Washington has veered back towards gradual tightening after the first quarter’s growth scare. elsewhere question-marks hang over the experimentation with negative interest rates. the jury is out on whether this will enhance or actually constrain growth.

In the world’s biggest economy, us data is soft and there is an increasing acceptance that growth expectations at the end of last year were too ambitious. that probably won’t see the Fed reversing policy but the tightening cycle will be glacially slow this year unless the improving labour market starts to feed through into stronger wage growth. the central bank says it is data-dependent so any pick-up in inflation

could result in a more rapid rate hike cycle than most investors currently expect.

In the eurozone, data is more solid than might be suggested by the eCB’s aggressive monetary stance. the banks are in better shape than they were and lending is picking up alongside better consumer confidence. 2016 should be better for the european economy than 2015 was. In the uk, the economy is holding its breath ahead of June’s eu referendum. Fortunately, the jobs market and housing remain strong and the weaker pound is a boost to exporters. the Bank of england is in no hurry to tighten policy and probably won’t this year.

In Japan, growth is dependent on wage growth finally showing through and the yen giving back some of its recent strength. Chinese demand is a key factor for Japan’s export-heavy economy. On the western side of the sea of Japan, hard landing fears remain largely absent from the data. the slowing trend continues but growth should stay safely above 6% and worries about currency depreciation look overdone. emerging markets remain heavily exposed to commodity prices (depressed and likely to stay that way as the supply/demand balance is not improving) and the dollar. Recent weakening of the us currency has helped. What are the main risks? A material slowdown in the us or rising inflation there; policy errors leading to a sharper than feared slow-down in China; an emerging market crisis (Brazil remains a worry).

6

Asset classes

EqUItIES

An investor who nodded off at the beginning of the year and woke up again towards the end of the first quarter might be forgiven for thinking that not a lot had happened. the msCI All Country World index is pretty much back where it started 2016. the reality, of course, is rather different. It’s been an extremely volatile start to the year.

markets around the world lost more than a tenth of their value in the first few weeks of 2016 as investors started to price in a global recession. this was not an unreasonable conclusion if you believe that a widening of corporate bond yields is a reliable indicator of trouble to come in the equity market as it has often been in the past. the spread between both investment grade and high yield bond yields and those offered by safe government bonds is standing at levels that in the past have pointed to a significant economic downturn.

the trouble is that these credit spreads are not a faultless indicator and the evidence from the economic data more broadly, while not great, suggests that a recession is by no means inevitable. the us jobs market is robust, as is housing,

a lower-for-longer oil price continues to provide support to the consumer economy and central banks are treading very carefully – either holding back from aggressive tightening, as in the us, or actively stimulating their economies, in Japan and europe.

Citi keeps a checklist of warning signs that a bear market is imminent. Back in 2000, 17 of its 18 signals were flashing red (and one amber); in 2007, 13 of the 18 were screaming bear market ahead. today, just 4 of the signals are at worrying levels. these are the level of takeover activity, corporate debt levels, and those bond-yield spreads. In addition both high levels of corporate return on equity and lower earnings per share growth are moderate concerns.

the two broad categories of signal giving the all clear are valuations (much lower than last year’s peak) and sentiment (generally poor). these two suggest that the most grudging bull market in history has the potential to grind on for some time yet. In a lower-for-longer interest rate cycle, the yield attractions of equities are a final element of support. the tricky first few weeks of the year look like a pause for breath not the start of a new bear market.

BOndS

Corporate bond yield premium

Sterling Corporate Index UK Gilt Index

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7 –

Mar-0

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8 –

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Sep-0

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Mar-1

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% Y

ield

to m

atu

rity


Past performance is not a reliable indicator of future returns.

the bond market continues to be distorted by central bank policy which has seen Japan join the negative interest rate club and europe dive ever deeper into monetary experiments. no-one really knows where these will take us but increasingly questions are being asked about the effectiveness of policy in the Alice in Wonderland world below the zero bound.

For investors, holding Government bonds looks increasingly like the greater fool theory of buying something on the grounds that someone else will pay an even sillier price than you have at some point in the future. Investing at a price you know will guarantee a capital loss if you hold to maturity looks unappealing when there remain other sources of reliable yield across the investment universe.

For those investors who value the diversification benefits of bonds (and in an uncertain world, who would not?), investment grade corporate bonds look like the sweet spot of the fixed income spectrum. the bonds of these higher-quality companies currently offer investors a 2% buffer over Government bonds, which is probably enough to compensate them for higher credit and illiquidity risk. At the high-yielding end of the corporate bond market, the yield premium is considerably higher but so too is the default risk which unavoidably eats into returns as a proportion of companies fail to deliver on their promises to investors. At this stage of the cycle, defaults always tick up; the question is how much is priced in. At the moment the risk/reward balance looks most favourable among the more blue-chip corporates.

It is important to remind ourselves why we invest in bonds. they provide a steady income, less volatility than the equity market and diversification. Because of this, they should merit a place in most portfolios, but with interest rates more likely to rise than fall much further over time, stock selection, liquidity management and flexibility to move up and down the bond spectrum are increasingly important. An experienced strategic bond fund manager is likely to be the first and last port of call for most personal investors for the same reason that you probably no longer fiddle around under your car’s bonnet.

Important information: Please be aware that the price of bonds is influenced by movements in interest rates, changes in the credit rating of bond issuers, and other factors such as inflation and market dynamics. In general, as interest rates rise the price of a bond will fall. the risk of default is based on the issuer’s ability to make interest payments and to repay the loan at maturity. Default risk may therefore vary between different government issuers as well as between different corporate issuers.

7

PrOPErty

Income: Firm foundations

0%

2%

4%

6%

8%

10%

12%

£ Cash1 mth

UK 10YGovernment

is the current yield

Coloured bars show the yield range over the last 15 years

UK CorporateBonds

UKEquities

UK PrimeReal Estate

UK SecondaryReal Estate

source: thomson Reuters Datastream, as at January 2016


the real estate cycle, particularly in the uk, is past its peak but the asset class remains attractive to investors in an environment of lower-for-longer interest rates and solid if uninspiring economic growth. Returns may not match those achieved in recent years but they are likely to be more than acceptable for the foreseeable future. Adding together expected capital gains and forecast rental income, I wouldn’t be surprised to see double digit gains for the asset class again, although there are no guarantees in property any more than in other asset classes.

In this mid-to-late-cycle phase, investors need to be aware of protecting their capital, watching the changing dynamics of the market and considering what they will do when the tide goes out.

All markets have enjoyed a happy combination of capital growth (as yields have been squeezed ever lower) and rising rental income. looking ahead, rents will be asked to do more of the heavy lifting and that means a greater focus on selecting the right locations and the right tenants.

Don’t be surprised, though, if rental growth turns out a bit better than expected. the fundamentals are still favourable – not enough development and many tenants still looking to expand. Property is likely to be an inflationary pocket in a disinflationary world. the attraction of mid-single digit income in a new environment of negative interest rates means capital will continue to chase this yield gap in the eurozone. europe is probably a slightly sweeter spot than the uk this year but both should do well.

the widening income spread between prime and secondary assets, with yields falling for both but faster for the best properties, is now a feature of core eurozone real estate just as it was last year and the year before in the uk. Capital values for secondary assets in europe are back at 2003 levels whereas prime assets are now more expensive than at the 2007 peak. In the uk, yields are flattening out (meaning values are stabilising) but properties in the regions are still no more expensive than they were 10 years ago. Rents are still growing usefully.

Property’s key attraction is this. It offers a high starting yield and income growth to boot. It’s like starting a sprint from 20 metres down the track.

Important information: some funds in the property sector invest in property and land. these can be difficult to sell so you may not be able to cash in this investment when you want to. there may be long delays in acting on your instructions to sell your investment. the value of property is generally a matter of a valuer’s opinion rather than fact.

COMMOdItIES

no-one rings a bell at the bottom of the cycle. It is only with hindsight that the catalyst for a change in direction seems obvious. the first quarter of 2016 saw a remarkable shift in sentiment towards the bombed-out commodities complex but only time will tell if the recovery from multi-year lows in natural resource prices is the real deal or just another suckers’ rally.

usually the bottom is found when the headlines are most grim. the first three months of this year certainly provided plenty of those with aggregate losses for the mining giants reaching tens of billions of dollars, capital investment slashed, jobs cut and, perhaps most telling of all, dividends abandoned or sharply reduced. BHP Billiton, one of the strongest companies in the mining sector, bowed to the inevitable and said it would no longer stick to a progressive dividend policy through thick and thin. Rather it would pay a fixed proportion of earnings out to shareholders; the dividend will rise and fall in line with profits.

the outlook for hard industrial commodities remains difficult. sam Walsh, the boss at Rio tinto, said he expected 2016 to be tougher than last year, “and quite frankly we thought that was tough”. the problem remains one of too much supply and not enough demand. As long as the stronger players think they can squeeze out their weaker rivals, production is likely to remain too high to see any material improvement in prices.

Oil looks more encouraging because capacity has been withdrawn more quickly. In particular, the rig count in the north American shale fields has come down sharply. that has been reflected in a rapid bounce in the price of crude from its multi-year low of under $26 a barrel. the question now is just how self-regulating the oil market will prove to be. Capacity that was quick to remove might be quick to bring on stream again so the oil price most likely won’t retrieve the highs of 2014 any time soon. still, there’s plenty of scope for an uptick from today’s price of around $40 a barrel. All in all, we’re neutral on commodities at these levels.

8

equities – a regional perspective

US

there’s no shortage of excitement on the political front in the us this year with the establishment taking an early kicking from an electorate that’s lost faith with the Washington elite. the unpredictability of the Presidential election might argue for instability in financial markets in most countries but the us system of government seems explicitly designed to clip the wings of the President in domestic policy terms. I actually think it will make little difference if voters deliver Donald trump or Hillary Clinton to the White House (or any of the other less likely candidates).

Analysis of stock market returns over recent decades shows little correlation with either the Republicans or Democrats so investors are better off looking at the economic fundamentals. unfortunately these currently present a mixed picture and it is increasingly hard to decide if Wall street is rolling over (as a cursory glance at the chart here suggests) or taking a well-earned pause for breath after a seven year bull market.

the good news in America is to be found in the jobs market, where a healthy level of expansion continues, and in housing. At the same time, the consumer is benefiting from the slide in the oil price which looks likely to persist as the ability of shale producers to switch capacity on again quickly promises to cap the recent rally. America should probably remain a core element of any globally diversified equity portfolio due to the size and robustness of its economy and its strength in the innovative parts of the market that offer better returns than the primary resources and manufacturing on which most emerging markets still depend.

the less good news is found in the outlook for corporate earnings and, particularly, in the valuation of the market which provides little for investors to get excited about. Goldman sachs expects earnings to push ahead by low double digits this year and next, falling to mid-single digit growth in 2018 and 2019. While that sounds respectable, history shows that forecasts are routinely reduced as each year progresses so I would see this as the top end of the likely range. this will certainly be the case if interest rates move more quickly than the current lower-for-longer consensus and the dollar strengthens as a consequence.

As for valuations, the multiple that investors are prepared to pay for shares typically reduces as a rate tightening cycle gets underway. With Wall street already trading on a relatively high ratio of earnings by global standards, this suggests valuation multiples are likely to stagnate at best from here. Combine disappointing earnings growth with this multiple squeeze and the best of the post-2009 rally for us shares is probably in the bag now. Certainly, contrarian investors will be looking elsewhere for any oomph in their portfolio returns. We retain our neutral stance on the us equity market.

US: Rolling over?

0

500

1,000

1,500

2,000

2,500

Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

S&P 500 Composite – Price Index


Past performance is not a reliable indicator of future returns. When investing in overseas markets, changes in currency exchange rates may affect the value of your investment. For full 5 year performance figures please see page 12.

If you’re interested in the us, three funds on our select list you may like to look at are:

■ Blackrock US Opportunities ■ Fidelity Funds – America ■ JPM US Equity Income

For a full list of select list funds in this sector please see the fund data section at the back of this report.

9

UK

the next few months are going to be dominated in the uk by the ebb and flow of opinion polls regarding June’s eu referendum. unlike the political headlines in the us, which may matter little to investors, the uncertainty over Britain’s future in europe could have a more significant impact. no-one really knows what a Brexit might mean for the uk economy, capital flows and foreign investment because an out vote would just be the start of a long and arduous negotiation. It’s the uncertainty rather than necessarily the outcome that investors are worried about.

the first few months of 2016 have given us an insight into what uncertainty can do to markets and it has not been pretty. Back from the Christmas break, investors started seeing the glass as half empty and the Ftse 100 quickly tested bear market territory when compared with the cyclical peak reached last April. As discussed on page 3, the latest correction looks more like a pause for breath than the onset of a more serious market decline because shares were not absurdly highly-rated last year and nor is recession the central economic case. Once the oil price stabilised it was unsurprising that the uk market also regained its poise.

Arguably, the fear that has accompanied the recent uncertainty has created contrarian opportunities in a number of areas of the uk market and made other safer havens look increasingly expensive. For example, commodity stocks and the oil majors looked very oversold during the quarter, especially those for which a rally in the oil price makes a maintained dividend look more likely. Banks too have taken a beating on the back of fears about the impact of negative interest rates. the gap between the ratings of these out of favour sectors and the ports in the storm type stocks in consumer staples and utilities looks wrong. the benefit a weaker pound provides for exporters should not be underestimated either.

so after a disappointing year for the uk market, its exposure to the more interesting commodity and energy markets, as well as its strong dividend attraction, makes it one of the more favoured destinations for investors this spring. the rotation from growth to value, defensives to cyclicals will favour more contrarian investors willing to be a bit early into the new market phase. Active investment should be rewarded this year.

Sterling’s boost to exports

Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16

1.3

1.4

1.5

1.6

1.7

1.8

US $ to UK £



If you’re interested in the uk, three funds on our select list you may like to look at are:

■ Fidelity MoneyBuilder dividend ■ Old Mutual UK Smaller Companies ■ royal London UK Mid Cap Growth


10

EUrOPE

shares in europe have been extremely disappointing over the past two years. In that time they have fallen by more than 20% as investors lost faith in mario Draghi’s ability to do ‘whatever it takes’ to restore the region to growth. Persistent falls in earnings expectations have meant that, despite the slide in share prices, valuations in the region are not particularly compelling – indeed if you strip out the two sectors that investors are most nervous about, banks and miners, then shares are valued pretty much in line with their average over the past 30 years.

With growth and inflation expectations on the floor and valuations neither too high nor too low, the outlook is pretty dull despite the promise of further stimulus from the european Central Bank. In fact, it could be argued that the eCB’s experimentation with negative interest rates is actually depressing sentiment and constraining growth.

What makes europe look interesting from a stock-pickers’ perspective is less the averages than the differentials beneath the surface. that’s because investors’ expectations of ‘secular stagnation’ have seen them weighting their portfolios heavily towards shares that seem to offer safe, defensive growth and away from areas more exposed to the health of the economy. Growth has trumped value; defensives have outpaced cyclicals. maybe those trends have gone too far.

If, as my colleague Paras Anand has been arguing for some time, things are not as bad as the eCB’s obsession with inflation might imply, then contrarian investors may be on the cusp of enjoying a rotation from one type of investment to another. His view, at odds with the eCB’s, is that disinflation is essentially a benign force linked to technological advancement and rising individual purchasing power rather than merely an indication of a lack of demand.

this is a theme picked up in a recent note from Goldman sachs which asked ‘what to buy as inflation expectations turn?’ Its conclusions are that european equities will outperform european bonds; that value will recover lost ground versus growth; that cyclicals like banks will do better than defensives like consumer staples; that dividend-paying stocks will come back into favour; and that europe will beat the us.

If you’re interested in europe, three funds on our select list you may like to look at are:

■ FP Crux European Special Situations ■ Invesco Perpetual European Equity Income ■ Jupiter European Special Situations


JAPAn

Japanese shares were the top performers in 2015 but have experienced a very shaky start to 2016. the liquid Japanese market is seen as a quick and easy way to implement a negative view on Asian markets as a whole.

the second major drag on the Japanese market so far this year has been the introduction of a negative interest rate policy which has affected financial stocks in particular. the inability to pass on negative rates to customers has squeezed banks’ profit margins. that said easy monetary policy should continue to support the market generally with further moves likely in June ahead of a July upper house election. With doubts over the effectiveness of monetary policy on its own, more fiscal support in the form of tax cuts and infrastructure spending is possible. the second sales tax hike, scheduled for April next year, could be delayed.

Although Prime minister Abe probably over-hyped the potential for his three arrows of stimulus and reform, the benefits are showing through. Corporate governance is much improved and businesses are more focused on generating a decent return on capital, unemployment is low and wage growth is beginning to emerge. Overall company profits growth remains high by global standards. For the first time in a generation there is a belief that Japan is heading in the right direction.

Against this backdrop, valuations in the Japanese stock market are attractive compared with other developed markets. Policy remains supportive and Japan is a major beneficiary of cheap energy. After a disappointing start to the year, which our tokyo-based fund managers view as an over-reaction to external

events, we stick with our positive view on Japan.

Japan’s improving labour market

0.2

0.4

0.6

0.8

1.0

1.2

1.4 3.0

3.5

4.0

4.5

5.0

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6.0

Jan-

00

May

-01

Sep-

02

Jan-

04

May

-05

Sep-

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08

May

-09

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10

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12

May

-13

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14

Jan-

16

Unemployment rate (inverted % lhs) Jobs-to-applicants ratio (x, rhs)


Past performance is not a reliable indicator of what might happen in the future. When investing in overseas markets, changes in currency exchange rates may affect the value of an investment.

If you’re interested in Japan, three funds on our select list you may like to look at are:

■ Baillie Gifford Japanese ■ Old Mutual Japanese Equity ■ Schroder tokyo


11

ASIA-PACIFIC Ex-JAPAn/EMErGInG MArKEtS

emerging markets have been out of favour with investors for so long now that you have to be a dyed-in-the-wool contrarian to even consider an allocation to this formerly ‘hot’ investment class. that should start to get investors’ antennae twitching. History shows that the best investment returns are achieved by rummaging around in other investors’ metaphorical dustbins. We may not be right at the bottom but the risk-reward balance suggests that we must be close to the point when it makes sense to start increasing exposure to emerging markets.

For many investors, emerging markets are synonymous with Asia. the region hosts the two most populous developing countries and the outlook in one of them, China, is a key driver of most other emerging economies thanks to their exposure to commodities.

China faces plenty of challenges. It has over-invested in infrastructure to help meet a hard GDP target. Borrowings, as a result, have soared. A manufacturing recession has added to the country’s woes. Capital is flowing out of the country, which means the Government is running down its reserves quickly to support the currency. On top of all that, the Party has not handled the bursting of a stock market bubble with any great skill.

that’s the bad news. there’s also plenty of good news as well. the Chinese economy is in transition. manufacturing is moving rapidly up the value curve and services now account for the largest slice of the economy. these trends mean generalisations about China don’t make much sense. unless the economy really melts down, there is money to be made by backing the winners (consumer and services stocks, top end manufacturers) and avoiding the losers (old economy heavy manufacturers and state-owned enterprises). most importantly, China’s stock market is cheap when measured against expected earnings – shares priced at less than 10 times earnings factor in plenty of real bad news and maybe so imagined problems too.

the other big market in Asia, India, is much more in favour. that might raise some red flags for investors, and selectivity remains key, but there is a good reason the Indian market is more highly priced. under Prime minister modi, structural reforms (albeit a bit slower than hoped for) are underway. GDP is expected to overtake China, rising above 7% next year to make India the region’s economic powerhouse. there is a demographic tailwind and many excellent companies for investors to choose from.

there is more to emerging market investing than Asia, however, and this quarter I want to focus on a region that has fallen off most investors’ radars in recent years. latin America has endured a savage bear market since its peak in 2011, losing about 60% of its aggregate stock market value in five years.

It’s been a perfect storm for investors in latin America. A heavy dependence on commodities has provided an unhelpful backdrop. that has been exacerbated by currency depreciation – just last year the mexican peso fell 17% against the dollar, for example. Finally, political woes have played their traditional role in the region.

Brazil has been the principal illustration of this. Declining tax revenues have been compounded by unconstrained Government spending, which now accounts for nearly a fifth of GDP. the country pays out more in pensions proportionately than Japan despite a much younger population. On top of these economic issues corruption scandals reaching all the way to the President’s office have soured confidence.

unsurprisingly, valuations in the region are now back to levels not seen since 2000. With the tide receding across the board, research-driven stock-pickers are now able to pick up good companies at great prices. the potential for positive catalysts – political change and a commodities rebound, for example – means the balance of risk and reward is better than in many years.

Latin America’s five year bear market

0

2,000

4,000

6,000

8,000

10,000

12,000

Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16

MSCI Latin America


For full 5 year performance figures please see page 12. Past performance is not a reliable indicator of what might happen in the future. When investing in overseas markets, changes in currency exchange rates may affect the value of an investment. Investments in small and emerging markets can be more volatile than those in other overseas markets.

If you’re interested in this region, three funds on our select list you may like to look at are:

■ Fidelity Emerging Markets ■ JPM Emerging Markets ■ Lazard Emerging Markets


12

InVEStMEnt VALUAtIOn At A GLAnCEPrice-earnings

ratio 2016E dividend yield

2015E

Equities %

us 17.0 2.3

europe 15.3 3.8

uk 16.4 4.4

Japan 13.3 2.3

Asia Pac ex Japan 12.7 3.4

emerging market Asia 11.7 2.8

latin America 14.9 2.9

Central east europe, middle east & Africa

10.9 3.8

redemption yield

Bonds %

ml Global High Yield 8.1

German 10-Year Bunds 0.2

ml Global Corporates 2.8

uk 10-Year Gilts 1.4

us 10-Year treasuries 1.9

market data

Please be aware that past performance is not a reliable indicator of what might happen in the future. When investing in overseas markets, changes in currency exchange rates may affect the value of your investment. Investments in small and emerging markets can be more volatile than those in other overseas markets.

source: Datastream, 21.3.16 in local currency terms. valuations: source Citigroup Global equity strategist – Citi Research, msCI, Worldscope, Factset Consensus estimates as at 21.3.16. Bond Yields: source Datastream as at 21.3.16.

InVEStMEnt PErFOrMAnCE At A GLAnCE

% (as at 21st March 2016) 3 m 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Equities

s&P 500 2.1% 10.4% 12.7% 23.3% 15.3% -0.5%

Ftse All share 2.7% 5.4% 14.3% 8.4% 10.9% -7.1%

Ftse 100 3.6% 5.6% 12.7% 6.4% 10.9% -8.5%

Ftse 250 -0.9% 4.3% 23.6% 18.5% 11.4% -1.3%

Ftse small Cap -0.1% 2.0% 23.9% 20.5% 6.4% 0.8%

euro stOXX -4.8% -5.8% 9.8% 19.9% 24.7% -15.4%

sHAnGHAI se -17.1% -18.2% -2.3% -11.9% 76.8% -16.7%

shenzhen -14.4% -19.0% 21.9% 2.2% 37.9% -0.2%

msCI emerging markets 5.3% -3.0% 0.5% -4.9% 5.5% -12.1%

nikkei 225 -11.4% 11.9% 28.0% 14.4% 39.9% -13.0%

msCI latin America 18.2% -5.9% -9.1% -20.6% -17.5% -12.7%

Bonds

us 10-Year treasuries 2.9% 12.7% 6.4% -3.8% 10.3% 1.9%

uk 10-Year Gilts 3.4% 15.4% 6.0% -3.2% 14.6% 3.2%

German 10-Year Bunds 3.8% 14.9% 9.0% 0.8% 16.5% 1.0%

JPm emerging markets Bond Index 5.6% 13.2% 10.1% -2.7% 5.0% 5.0%

ml Global High Yield 4.4% 5.4% 13.3% 8.3% -2.4% -0.4%

ml Global Corporates 3.1% 4.7% 6.5% 3.4% -0.2% 0.8%

Commodities

CRB Commodities Index 2.4% -10.5% -6.9% 1.9% -28.5% -17.5%

Crude Oil (Brent) 12.3% 7.7% -13.6% 0.3% -49.7% -25.4%

Gold spot 15.3% 15.7% -2.2% -17.3% -11.4% 5.2%

lme Copper 7.5% -9.6% -11.1% -14.0% -6.4% -16.2%

GsCI soft Commodities 2.5% -23.9% -19.2% -0.1% -29.9% 1.1%

silver 10.6% -11.0% -10.3% -31.2% -17.9% -7.3%

13

stAnDARDIseD PeRFORmAnCe DAtA (%) OveR tHe PAst FIve YeARs

% (as at 29th February 2016) 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016Morningstar Fund Rating

mIX OF Asset ClAsses

Balanced7Im Balanced C Acc 0.6 8.4 6.8 10.7 -7.6 JJJ

F&C mm navigator moderate C Acc -1.0 9.3 10.1 7.2 0.1 JJJJ

Premier multi-Asset Conservative Growth Class C Acc 1.9 7.3 4.6 4.3 -0.8mixed Assets - Defensive7Im moderately Cautious C Acc 2.4 7.6 3.8 8.6 -5.0 JJJJ

AXA Defensive Distribution 7.2 5.4 2.4 6.0 -1.9 JJJ

Jupiter Distribution Fund 6.8 9.7 8.1 8.6 0.8 JJJJJ

mixed Assets - FlexibleHenderson multi-manager Active Fund I Acc -10.2 13.6 11.6 8.3 -2.4 JJJ

Jupiter merlin Growth Portfolio 3.6 11.1 7.0 13.7 -2.0 JJJJ

mixed Assets - Growth7Im moderately Adventurous C Acc -0.8 9.7 9.9 12.6 -8.7 JJJ

AXA Framlington managed Balanced 4.2 12.9 10.7 6.3 -2.7 JJJJ

neptune Balanced C Acc 2.7 6.2 5.6 9.8 -7.9 JJJ

schroder mm Diversity tactical Fund - - 10.4 6.3 -2.2 JJJJ

mixed Assets - IncomeF&C mm navigator Distribution C Acc - - 8.1 7.0 -1.8 JJJJJ

JPm multi-Asset Income Fund C - net Income - - 7.0 8.6 -6.7 JJJ

Premier multi-Asset monthly Income 3.0 16.6 12.0 10.7 -1.3 JJJJJ

eQuItIes FunDsAsia Pacific equity excl JapanFidelity Index Asia Pacific ex Japan - - - 11.4 -11.3Fidelity Asia Fund* -1.1 11.8 -7.9 10.5 -7.7 JJJ

m&G Asian 3.2 18.6 -9.5 16.7 -11.9 JJJJ

schroder Asian Alpha Plus Acc 11.1 18.6 -12.3 20.3 -8.4 JJJJJ

stewart Investors Asia Pacific leaders Fund 10.2 18.2 -9.0 30.2 -4.0 JJJJJ

Asia Pacific equity incl JapanAberdeen Asia Pacific and Japan 5.2 15.7 -11.8 17.7 -13.0 JJJJ

Fidelity Funds - Pacific Fund -6.3 17.9 14.3 12.9 -0.4 JJJJJ

smith & Williamson Far eastern Income and Growth trust -2.8 15.4 1.0 10.4 4.7 JJJJJ

emerging markets Global equityFidelity emerging markets Fund Retail-Accumulation (uk) 0.4 8.0 -3.0 16.6 -9.5 JJJJJ

Fidelity Index emerging markets - - - - -15.1JPm emerging markets Fund - - -14.0 14.8 -16.8 JJJJ

lazard emerging markets Fund 7.0 8.2 -15.9 11.1 -16.2 JJJ

threadneedle Global emerging mkts equity -1.5 9.4 -9.6 13.2 -12.0 JJJJ

emerging markets Regional equityFidelity Funds - Greater China -2.8 15.5 1.5 21.7 -6.1 JJJJJ

Fidelity Funds - latin America Fund 1.1 2.7 -29.6 1.7 -18.1 JJJJ

Franklin India -1.6 1.6 -11.3 66.9 -14.9 JJJJJ

threadneedle latin American -0.9 -1.0 -27.9 -2.0 -25.0 JJJ

europe equity excl ukBlackRock Continental european -6.7 24.1 16.8 1.6 3.4 JJJJJ

Fidelity Index europe ex uk - - - 4.3 -5.8

Fund data

thE SELECt LISt – InVEStMEnt IdEAS FrOM OUr ExPErtS

the funds on the select list are hand picked from the range available on our fund supermarket. For more information on how these funds are selected visit fidelity.co.uk/select. the select list is not a recommendation to buy funds. equally, if a fund you own already is not on the select list we are not recommending that you sell it – the list represents funds and managers that our experts particularly rate. Please be aware that past performance is not a reliable indicator of what might happen in the future. the value of investments and the income from them can go down as well as up and investors may not get back the amount invested. For funds that invest in overseas markets, the returns may increase or decrease as a result of currency fluctuations. Investments in small and emerging markets can be more volatile than other more developed markets. For funds launched less than five years ago full five-year performance figures are not available. Before you invest, please ensure you have read Doing Business with Fidelity and the key Investor Information Document (kIID) or Fund specific Information Document (FsI), relevant to your chosen fund(s). these documents give you all the information you need to know about Fidelity, including details of the objective, investment policy, risks, charges and past performance associated with the fund(s). Instructions on how to access these documents can be found at fidelity.co.uk/ importantinformation. If you do not have a computer or access to the internet please call Fidelity on 0800 41 41 61 to request a printed copy of the documents. the Full Prospectus is also available on request from Fidelity.

* Formerly the Fidelity south east Asia Fund

Please note, the performance figures shown here are based on ‘clean’ share classes. For more information about ‘clean’ pricing, please visit fidelity.co.uk/pricing.

14


FP CRuX european special sit A Acc GBP -3.9 24.3 9.9 8.3 3.0 JJJJ

Invesco Perpetual european equity Income - - 31.8 3.7 -5.7 JJJJ

Jupiter european special situations Fund -5.0 20.5 14.6 4.4 -0.2 JJJJ

threadneedle european select 6.9 24.3 8.8 11.4 -0.2 JJJJJ

Global equityBnY mellon long term Global equity Inc 6.2 15.3 2.7 15.1 4.3 JJJJ

Fidelity Index World Fund - - 10.3 17.1 -0.6 JJJJJ

m&G Global select 0.9 17.1 2.4 12.5 0.6 JJJJ

Rathbone Global Opportunities 3.2 15.9 16.3 9.7 10.2 JJJJJ

templeton Growth -6.1 16.7 21.5 8.7 -8.2 JJJ

Global equity IncomeFidelity Global Dividend Fund - 19.6 11.7 16.5 8.6 JJJJJ

Invesco Perpetual Global equity Income - - - - -1.6lazard Global equity Income Acc 5.9 15.4 4.0 9.1 -12.8 JJ

Global ethicaledentree Amity International Fund -1.7 14.8 2.9 8.4 -6.1 JJJ

F&C Responsible Global equity Fund 2 Acc 2.9 13.6 8.8 18.3 1.1 JJJJ

Global Real AssetsFidelity Funds - Global Real Asset securities Fund - 13.3 -2.9 7.5 -7.7 J

First state Global listed Infrastructure securities 6.0 14.7 8.6 18.5 4.9 JJJJJ

sarasin Food and Agriculture Opportunities Fund -5.6 16.0 -8.3 13.9 -1.6 JJJJJ

Japan equityAberdeen Japan equity Fund 0.1 16.7 1.3 22.3 4.9 JJJJJ

Baillie Gifford Japanese -2.5 15.8 17.4 18.1 -2.5 JJJJJ

Fidelity Index Japan - - - 17.4 0.7Old mutual Japanese equity Acc 0.2 11.8 11.0 14.2 -0.5 JJJJ

Pictet Japanese equity Opportunities HI - - 24.5 29.0 -15.9schroder tokyo Acc -0.7 9.0 5.3 19.3 1.6 JJJJJ

north American equityFidelity Funds - America Fund 3.8 19.0 17.8 26.5 5.7 JJJJJ

Fidelity Index us Fund - - 13.1 25.0 4.5 JJJJJ

JPm us equity Income C (acc) - GBP 11.9 18.2 11.6 24.5 3.6 JJJJJ

JPm us select A Fund Acc 7.1 16.4 12.7 27.8 1.3 JJJJ

Old mutual north American 10.4 15.1 22.9 27.7 4.1 JJJJJ

north American small/mid Cap equityBlackRock us Opportunities -3.9 13.7 22.7 20.4 -4.0 JJJ

europe equity single CountryBaring German Growth trust -5.4 19.0 22.6 1.7 0.6 JJJJJ

Fidelity Funds - Germany Fund -8.1 25.7 23.4 1.1 2.5 JJJJJ

Fidelity Funds - Italy Fund -21.4 17.6 36.4 -5.4 -5.4 JJJJ

uk equityAXA Framlington uk select Opportunities 9.2 11.7 22.0 2.8 -1.7 JJJJ

CF lindsell train uk equity Acc 7.3 30.5 20.0 14.7 2.1 JJJJJ

Fidelity Index uk Fund 1.9 12.2 12.6 5.5 -7.7 JJJ

Fidelity uk select Fund 1.6 11.6 15.1 12.3 -2.2 JJJJJ

HsBC Ftse 100 Index Acc 2.4 10.9 10.6 5.5 -9.1 JJJ

Jupiter uk special situations Fund 5.2 21.4 20.8 7.6 -7.3 JJJJ

liontrust uk Growth Fund 13.1 13.3 14.4 7.9 -0.8 JJJJ

uk equity IncomeArtemis Income Fund 4.3 18.5 17.4 8.2 -3.8 JJJJ

Fidelity moneyBuilder Dividend Fund 9.1 18.1 15.9 10.8 -0.9 JJJJ

Henderson uk equity Income & Growth Fund 6.8 24.1 28.1 1.5 -5.7 JJJ

JOHCm uk equity Income B GBP Acc - - - 3.8 -8.5liontrust macro equity Income Fund 2.2 13.7 22.0 6.4 -5.0 JJJ

uk ethicaledentree Amity uk Fund 6.8 18.2 22.0 4.7 -0.4 JJJJ

kames ethical equity Fund 0.7 18.8 29.6 4.6 -0.9 JJJJ

uk small/mid Cap equityHsBC Ftse 250 Index Acc 1.4 22.1 24.0 6.2 -2.0 JJJ

marlborough special situations Fund Acc 7.5 17.8 33.2 1.6 11.1 JJJJJ

Old mutual uk smaller Companies Acc 4.3 21.8 34.0 -1.4 8.9 JJJJ

Royal london uk mid-Cap Growth 9.3 20.1 30.7 7.8 -0.8 JJJJ

threadneedle uk mid 250 Fund 2.9 23.5 25.2 6.6 6.3 JJJJ

FIXeD InCOme FunDsemerging markets local Currency BondInvestec emg mkts local Curr Debt 8.7 9.7 -20.6 0.6 -7.0 JJJ

Pictet emerging local Curr Debt P Inc 11.3 9.4 -21.7 0.6 -3.5 JJJJ

templeton emerging markets Bond - - -4.6 -4.8 -8.4



15


europe Corporate BondFidelity Funds - euro Corporate Bond Fund 3.8 13.9 0.0 -3.4 4.4 JJJ

m&G european Corporate Bond 3.3 12.1 0.3 -5.4 3.8 JJJJ

europe High Yield BondFidelity Funds - european High Yield Fund 1.3 18.4 5.7 -9.9 4.0 JJJJ

Invesco Perpetual High Yield - - - - -7.0m&G european High Yield Bond -0.5 16.8 4.7 -8.2 3.0 JJJ

Global Aggregate Bondm&G Global macro Bond 10.9 12.3 -6.9 7.0 7.8 JJJJJ

newton Global Dynamic Bond Institutional - - 1.2 3.2 -1.4 JJJ

threadneedle Global Bond Fund 8.4 1.7 -8.0 5.0 12.3 JJJ

Global High Yield BondBaring High Yield Bond Fund 2.0 8.8 5.9 -1.4 -9.7 JJ

JPm Global High Yield Bond Fund 5.1 10.0 6.9 1.3 -9.5 JJJ

m&G Global High Yield Bond 1.6 11.9 8.0 3.6 -7.0 JJJJ

Global Inflation linked BondFidelity Funds - Global Inflation-linked Bond Fund 6.4 2.9 -3.5 0.4 -3.3 J

slI Global Index linked Bond 12.1 3.5 -4.0 8.3 -0.7 JJJ

uk Aggregate BondFidelity strategic Bond Fund† 8.4 9.5 3.9 9.3 -3.5 JJJJJ

Henderson Preference & Bond Fund -0.6 14.7 6.1 7.5 -2.3 JJJJJ

Henderson sterling Bond Acc 8.0 10.4 3.6 10.8 -4.6 JJJ

Jupiter strategic Bond 6.5 12.6 6.8 4.8 -0.7 JJJJJ

m&G Optimal Income Fund 9.9 9.4 7.6 4.9 -4.4 JJJJ

uk Corporate BondBaillie Gifford Corporate Bond 8.5 14.7 5.7 9.5 -4.5 JJJJ

BlackRock Corporate Bond tracker - - - 10.9 -1.3Henderson strategic Bond Fund 0.1 14.0 6.0 7.5 -2.2 JJJJJ

m&G strategic Corporate Bond 10.6 7.9 4.7 8.9 -3.2 JJJJ

uk Government BondAllianz Gilt Yield Fund 15.2 3.4 -2.5 9.6 3.4 JJJJ

Henderson Institutional uk Gilt 15.6 2.0 -1.9 9.4 3.9 JJJ

HsBC uk Gilt Index Fund Acc 14.6 1.5 -1.7 11.0 4.1 JJJ

Royal london uk Government Bond Fund 14.7 1.4 -1.5 9.6 3.8 JJJJ

uk Inflation linked BondHenderson Index-linked Bond Fund 22.9 5.7 -2.1 16.2 3.6 JJJ

legal & General All stocks Index linked Gilt Index trust 19.0 4.8 -1.4 15.9 3.6 JJJ

m&G Index-linked Bond 21.8 4.8 -1.6 15.7 4.4 JJJ

PROPeRtY FunDsProperty - listedAberdeen Property share -2.5 25.7 28.6 15.8 -2.6Fidelity Global Property Fund 0.7 23.9 -7.7 29.5 0.6 JJJJ

Property - PhysicalHsBC Open Global Property Acc - - 3.3 18.0 3.9 JJJJJ

COmmODItIes FunDsCommodities - GeneralBarings Global Resources Fund -9.2 -16.7 -10.6 -0.8 -16.9 JJJ

First state Global Resources Fund -12.0 -18.4 -11.4 -10.0 -24.7 JJJ

Commodities - Precious metalsBlackRock Gold and General -0.3 -26.0 -31.7 -6.6 4.1 JJJJJ

Investec Global Gold Fund -1.3 -26.6 -29.8 -9.2 8.8 JJJJ


† the investment policy of Fidelity strategic Bond Fund means it can be more than 35% invested in government and public securities. these can be issued or guaranteed by other countries and governments. For a full list please refer to the fund’s prospectus.

source: morningstar as from 1.3.11 to 29.2.16. Basis: bid to bid with income reinvested net of uk basic-rate tax. excludes initial charge. For the latest yields please call 0800 41 41 61 or visit fidelity.co.uk


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