The 7 Deadly Wins

Our 7 Deadly Wins for 2010 looks at a number of strategies that we think clients should be assessing and reviewing this year. If there is a common theme, it is that the huge monetary and fiscal stimulus we have seen raises the prospect of inflation. Inflation drives up prices of real assets, for instance, commodities, manufactured goods and real estate. We believe the current environment favours fundamental research oriented managers that possess a detailed view on return prospects at the security level and our seven ideas for 2010 reflect the belief that a continued focus on real assets should prove profitable over the medium term. We hope you find them thought provoking and useful. 1. Global Real Assets  2. Global Inflation-Linked  3. European Real Estate  4. Global Equities  5. Emerging Europe, Middle East & Africa Equities  6. Asia ex Japan Equities  7. Multi-Asset Investing

Opportunities for 2010

Global Real Assets

"Real Assets" such as property, infrastructure, commodities, industrial stocks and energy related shares are expected to benefit from the nascent recovery in global economies.

Adding a portfolio of these assets that covers both developed and emerging markets to a non-directional equity portfolio adds a "tilt" to the portfolio to improve its positioning to benefit from a return of inflation and continuing development in the emerging world. Amit Lodha, who manages the Real Assets Securities fund, has successfully balanced the defensive elements of developed world securities with emerging market exposure to generate strong alpha over time. Read more

Global Inflation Linked Bonds

After two years of unprecedented monetary stimulus, inflation remains a key unknown facing investors in 2010 and beyond. While there are many solutions across asset classes to hedge against rising inflation,

within fixed income most have been confined to inflation linked Gilts. However, a global portfolio of inflation linked bonds can offer a better and more cost effective means to hedge against the growing inflation risk facing UK investors. The FF Global Inflation Linked Bond Fund, managed by Andy Weir, has generated good risk adjusted returns for investors since its inception in 2008. Read more 

European Real Estate 

The recovery in European commercial real estate is now well underway. We believe we are in the early days of the cycle and there will be plenty of opportunties for research driven managers.

After successfully calling the turn in the UK market in December 2008, Fidelity believes that the large capital value corrections are through and that the risk and return environment for property is very attractive at this point in the cycle. Our innovative fund structuring offers investors unconflicted access to European real estate managed by Keith Sutton, who has 20 years experience of real estate investing based in Munich. Read more

Global Equities

Investors are increasingly taking advantage of emerging markets by moving their benchmarks away from Developed Indices to All Country indices given the expansion of emerging markets

from 1% of the global opportunity set in 1998 to around 12% in 2009. However when running such a mandate, a simple "bolt-on" approach fails to properly take into account the global competitiveness of some market leading companies in the emerging markets. Ilario di Bon runs Fidelity's Global Opportunities discipline to an MSCI All Country World index using an integrated approach that is a powerful expression of our sector driven stock picking expertise. Read more

Emerging Europe, Middle East & Africa Equities

Global Emerging Markets marked up some impressive performance last year, not for the first time. Many investors may now doubt whether those returns can be repeated this year. However, before investors dismiss

GEM's, consider that 2009's gains are just part of a longer term story that has much further to run and countries like Africa and Russia contain companies superbly poised to benefit from superior local economic growth rates. Nick Price, who runs the Fidelity Emerging Europe, Middle East & Africa Fund, has successfully exploited opportunities in both well known names and those that are off the beaten track where Fidelity's research analysts are among the very few Western investment managers to tread. Read more

Asia ex Japan Equities

The outlook for the region appears favourable and the underlying long term story remains intact. Attractive dividend payouts, healthy balance sheets and improved corporate governance underpin the

investment case. Some reliance on the West will unavoidably remain but increasingly strong intra-regional relationships may finally being a fuller sense of decoupling to fruition. John Lo runs the Fidelity Institutional Pacific ex Japan Fund on a fundamental bottom up basis, focussing on under-researched investment opportunities. This approach has resulted on consistent alpha generation over time. Read more

Multi-Asset Investing

Forecasting future asset class returns are, needless to say, challenging. To do so effectively requires, among other things, a clear picture of your starting point. Where are we in the cycle? What is the

timing for increased inflation? To generate profits for clients one must be able to model in real time when the world economy moves from one phase in the cycle to another; Trevor Greetham, a member of Fidelity's asset allocation group, uses a range of proprietary tools to generate a "now-cast" of each possible economic growth and inflation outcome to drive fund positioning in our Multi-Asset Growth Fund on a real time basis. The output from these models is summarised in our "Investment Clock". Read more