On Wednesday lunchtime, Fidelity Worldwide Investment held a presentation luncheon at the Cercle Munster in Luxembourg-Grund to a packed attendance, introduced by Yannick Nelissen Grade, Sales Director at Fidelity.

Stephanie Sutton, Investment Director at Fidelity, addressed the macro-economic aspects of the US and highlighted some "bright spots among the chaos" including an upturn in the labour market (5.1% unemployment currently) where new jobs are being created and employees starting again to leave jobs for better pay, as well as industrial output increasing without any inflationary pressure. Some companies are also now starting to consider applying wage increases. The housing market is buoyant and is recovering to the pre-crisis level; as confidence returns to the market, young people who have been living longer with their parents are now starting to purchase real estate.

There is strong consumer sentiment with retail sales increasing. With corporate profitability at an all-time high, cash generation is leading to a huge amount of buy-backs with mergers and acquisitions increasing too.

In general, she said that the US market is less volatile as a whole than the Chinese market. Will the US Federal Reserve decide to increase interest rates? She explained that the jury is still out and feels that there will be more volatility in the US market before it evens out. However, it is a good time to invest, as long as you understand the indicators.

Angel Agudo, Portfolio Manager at Fidelity in London, presented the America Fund. He explained how he works closely with the Equity Team at Fidelity, with investment in a diversified portfolio of US securities. He explained his investment process based on strategy, with the ratio of upside to downside being key, and his focus on risk management at portfolio level where he calculates how much of his client's money he could really lose. He looks for indicators such as cash in the balance sheet for protection when constructing a balanced portfolio, as well as the potential gains. He explained that stock-specific risk is dominant.

He presented examples of specific stock, including Eli Lilly (sales down, costs up, but investing heavily in R&D) and Juniper, and also covered a number of companies in which he has invested in the past, explaining his reasoning in each case. He admits he has been running the fund in a conservative way but he is happy as the results (performance) have been positive. The sector and sub-sector weightings have been 21.4% in healthcare, 23% in IT, 12.4% in industrials, 13.9% in finance, 9.7% in consumer staples, 7.6% in consumer discretionary, 4.4% in energy and 2.9% in telecom.

James Dudgeon, a US Analyst at Fidelity, talked about how he works with the Portfolio Managers, undertaking sector research and stock work in the energy and utilities sector. He explained how a lot of the growth in the US energy renaissance is in shale production which has risen from 1 million barrels/day to 5 million. With Saudi Arabia, Iran and Iraq refusing to cut production, the US is re-adjusting to the new price environment. He explained how they have a supply-and-demand model for each country, with which he sees the US market recovering mid next year. US production is slowing down, with international projects delayed.

Photo by Geoff Thompson: Stephanie Sutton, Investment Director at Fidelity