Fidelity, Invesco Leaders on Opportunities in the Second Half

Fidelity Investments and Invesco leaders joined VettaFi’s Midyear Outlook symposium to discuss what the rest of the year holds. Fidelity's Treacy and Invesco's Schroeder discussed the continued geopolitical and concentration risk as issues to watch. Both provided some examples of funds that could help address just that.

The segment, hosted by VettaFi Head of Research Todd Rosenbluth, included thoughts from Fidelity Investments Institutional Portfolio Manager Benjamin Treacy, CFA, and Invesco Director, Factor and QQQ Equity Product Strategy Paul Schroeder. The duo spoke to Rosenbluth about a myriad of topics looming over the second half. Prompted by Rosenbluth, both spoke to what caught their eye to start the year. For Treacy, the resilience of markets despite geopolitical and inflationary headwinds stood out. The rise of small-caps despite those headwinds, too, piqued his interest.

Schroeder, meanwhile, spoke to the VIX as a measure of the volatility from those headwinds. While markets have done well, he said, the underlying risk tension has stood out to him. “So even though we've seen strong index performance at the top, there's been a lot of churning and shifts in leadership underneath that have really provided for a lot of exciting conversations,” Schroeder said.

Both firm leaders pointed to small- and mid-cap stocks picking up steam. Treacy emphasized the growth in conversations on that space of late than 12 months prior. Schroeder, meanwhile, grounded that interest amid a contrast between the Magnificent Seven — down almost 5% on the year — and the overall U.S. market. Measured by the S&P 500, for example, the market is up 8%, he said. That tipped Schroeder to underscore his firm’s equal weight fund.

Treacy, meanwhile, spoke to Fidelity Investments’ fundamental suite of ETFs. That suite, which has grown with new international offerings in recent years, offers actively managed ETFs “that look to beat our benchmarks by actively selecting securities,” he said. Treacy spoke to funds like the Fidelity Fundamental Large Cap Core ETF (FFLC) . “They are multi-manager ETFs,” he said. “So each one of these is being managed and we're selecting stocks based on the insights and conviction levels that we get from our fundamental portfolio managers here at Fidelity.”

He spoke to, for another example, the Fidelity Investments Fundamental Small-Mid ETF (FFSM) . FFSM charges a 43 basis point (bps) fee to offer exposure to that space that Treacy highlighted. “It’s not just small, it's not just mid, it's small and mid,” he said. “So it allows us to buy companies...across a very wide swath of the market, right?” “This portfolio leverages the insights of 12 different portfolio managers at Fidelity that run small- and mid-cap portfolios,” he added. “We have an expert in midcap growth stocks, so we leverage their conviction as well as mid-cap value and small-cap growth and small-cap value.”

The Fidelity Fundamental Large Cap Growth ETF (FFLG) , meanwhile, also offers an active approach. That helps t...