Monday December 31, 2012
by Jack Bowers, editor Fidelity Monitor & InsightOur conservative pick for 2013 is
Fidelity New Markets Income (
FNMIX), an emerging market debt fund. Our aggressive pick for the coming year is
Fidelity Select Industrials (
FCYIX), a global infrastructure play.
New Markets invests mainly in dollar-donominated bonds issued by emerging country governments. Back in the late 90s, it was a very risky bet, but today it is mostly investment grade and risk is on par with a conservative high-yield bond fund.
We like it because inflationary pressures in emerging countries have abated, and unlike developed countries there are no chronic debt problems stemming from burdensome entitlement benefits.
Long-time manager John Carlson is one of the best in the industry when it comes to analyzing this segment, and his track record speaks for itself.
Fidelity Select Industrials is our pick for more aggressive investors. Much of the world is playing catch-up when it comes to transportation, power generation, clean water and medical technology.
And the shale boom is boosting domestic demand for industrial supplies and transportation services while at the same time reducing the cost of providing them. Low borrowing costs and better credit availability are helping too, especially where high-ticket capital goods are involved.
Best of all, low-cost foreign competition is not a problem for these firms -- emerging country copy-cats are neither willing nor able to compete because the markets are too specialized and the quality and reliability standards are too high.
Learn more about this financial newsletter at Jack Bower's Fidelity Monitor & Insight.Related articles
