This is for investment professionals only and should not be relied upon by private investors

INVESTMENT CLOCK UPDATE APRIL 2011

Trevor Greetham joined Fidelity in January 2006 as Asset Allocation Director. In addition to managing funds, Trevor is
a member of Fidelity’s Asset Allocation Group.
Prior to joining Fidelity, he spent ten years at Merrill Lynch, where he was Director of Asset Allocation. Trevor began his
career with UK life insurer Provident Mutual.

  He holds an MA in Mathematics from Cambridge University and is a qualified actuary.

An extended cycle is now in prospect

We are in the Overheat stage of the cycle - the weakness in the LEAD INDICATORS IN FOCUS
Japanese economy in the aftermath of the earthquake will
Inflation
extend this phase by creating additional stimulus and reducing
the need for other central banks to raise rates.  Rising energy prices are pushing headline inflation higher – a trend
that is likely to continue for now.
Inflationary pressures could also intensify due to supply chain
disruption in Japan, while oil prices may move higher due to  Oil prices could rise further on concerns that a move away from
fears over supply and expectations of rising demand at the nuclear power will increase demand while conflict in North Africa raises
expense of nuclear power. fears over supply.
Looking ahead, the much-anticipated start of monetary Growth
tightening in developed economies may cause another
correction in risky assets, but we do not expect this to be a
 The global growth scorecard continues to strengthen.
significant turning point. Stocks are earnings sensitive - it’s the  Monetary policy in the US, Japan and Europe remains loose by
Fed's last rate hike investors should fear, not the first. historical standards, business confidence is rising and economists are
upgrading their economic growth forecasts.

CURRENT ASSET ALLOCATION POSITIONING

 We continue to favour risky assets, and have increased exposure to
commodities, resource sectors and Japanese equities within the multi-
asset funds.
 Commodities remain vulnerable to upward price shocks. As fears over
the Middle East linger, oil prices could rise on concerns that a move
away from nuclear power will increase demand.
 We remain very underweight in government bonds, with yields likely to
rise as the US Federal Reserve brings its ‘QE2’ monetary easing
program to an end, while the European Central Bank is expected to
increase Euro-zone interest rates.

Underweight Neutral Overweight

Equities

Property

Commodities

Bonds

Cash

 
 
 
 
 
 

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