FidelityNow: U.S. tech: Is it time to diversify?

[00:00:04.371] It's appropriate to be diversified and the reason I say this is, we

[00:00:07.774] have a Fidelity portfolio consulting team called Fidelity Portfolio Solutions.

[00:00:12.345] They've met with hundreds of advisors and what we see is a massive

[00:00:16.483] overweight to U.S. Growth.

[00:00:18.551] And has rushed back in there?

[00:00:20.420] No, I'm just saying that I think over the last 10 years

[00:00:24.524] it's done so well that it's grown disproportionately relative to international

[00:00:28.661] or Canadian equity within advisor books.

[00:00:30.964] And so, I think the U.S. economy is something that you

[00:00:34.901] do need to own, but I think also just the run it's had relative to the rest of

[00:00:38.972] the world would have taken it from a 25% weight to a 35% weight and

[00:00:43.309] also value really only worked in 2022 and somewhat to a degree in 2023.

[00:00:47.914] So we're seeing a big bias towards U.S. growth and not style diversification

[00:00:51.918] across investment style or geography.

[00:00:55.121] So I do believe that buying global equity is probably

[00:00:59.292] the best place right now.

[00:01:00.960] Because it allows the PM to make the call on relative valuation

[00:01:04.998] or geopolitics or macro on U.S.

[00:01:09.102] relative to international and you don't necessarily have to make that call

[00:01:12.272] yourself. And the reason I say that is when you meet with a number of our

[00:01:16.209] PMs, the argument will be the U.S. tech sector is the best in the

[00:01:20.146] world. There is no NVIDIA in Europe,

[00:01:22.315] there is not Facebook in Europe or Meta. But what about China?

[00:01:25.385] They do exist there. So you have Alibaba, you have Tencent.

[00:01:30.256] But at the same time, buying a grocer in Europe versus buying the U.S.,

[00:01:34.794] you can actually have very similar company characteristics and pick up the

[00:01:38.798] European grocer at a much cheaper valuation.

[00:01:41.701] So what we're seeing a lot in the global space is the U.S. tech is the

[00:01:45.772] tech space that you do want to be exposed to, but I may pick up my defensives

[00:01:50.210] or my utilities exposure through an international play.

[00:01:53.546] So I think the global equity space is probably what we have an opportunity

[00:01:57.851] right now in the advice community to say, I don't want to bail

[00:02:01.821] on U.S., but I do want to pick up the relative valuation argument

[00:02:04.724] internationally. You can leave that to portfolio manager to find those unhidden gems.