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How to invest using the business cycle
Use economic signals to see what investments may shine at what turn in the business cycle.

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In the aftermath of the worst inancial crisis since the Great Depression, the U.S. has experienced a slow pace of economic growth. Since 2009, the post-crisis period—characterized by private-sector deleveraging and extraordinary levels of monetary and iscal policy intervention—has caused some experts to assert that this economic climate will not resemble the typical business cycle patterns of recent decades. However, our historical analysis suggests that the rhythm of recent cyclical luctuations in the economy has been similar to the traditional pattern. As a result, a business cycle approach to asset allocation can still add value as part of an intermediate-term investment strategy. Key takeaways

The business cycle re lects the aggregate luctuations of economic activity, which can be a critical determinant of asset performance over the intermediate term. Changes in key economic indicators have historically provided a fairly reliable guide to recognizing the business cycle’s four distinct phases—early, mid, late, and recession. Our quantitatively backed approach seeks to identify the shifting economic phases, providing a framework for making asset allocation decisions according to the probability that assets may outperform or underperform. Although the slow-growth post-crisis expansion has differences with other periods since World War II, the current cycle’s pattern so far con irms that the business cycle approach is still a relevant tool for today’s environment.

Asset allocation framework
At any given time, asset price luctuations are driven by a con luence of various short-, intermediate-, and long-term factors. For this reason, adopting a comprehensive asset allocation framework that analyzes underlying factors and trends among the following three temporal segments can be an effective approach: tactical (one to 12 months), business cycle (six months to ive years), and secular ( ive to 30 years).

Over the intermediate term, asset performance is often driven largely by cyclical factors tied to the state of the economy—such as corporate earnings, interest rates, and in lation. The business cycle, which encompasses the cyclical luctuations in an economy over many months or a few years, can therefore be a critical determinant of asset market returns and the relative performance of various asset classes. Asset price fluctuations are driven by a confluence of various short-, intermediate-, and long-term factors.

Source: Fidelity Investments (Asset Allocation Research Team).

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Our quantitatively backed. credit growth becomes strong. and there have been cycles when the economy has skipped a phase or retraced an earlier one.. Understanding the business cycle Every business cycle is different in its own way. performance for stocks and bonds has been heavily influenced by the business cycle. setting up the next expansion. Economic growth rates slow to “stall speed” against a backdrop of restrictive monetary policy. we can see that shifts between business cycle phases create differentiation in asset price performance (see graph to the right). and the inventory cycle—as well as changes in the employment backdrop and monetary The mid cycle is characterized by a positive but more moderate rate of growth than that experienced during the early-cycle phase. creating a healthy environment for rapid margin expansion and pro it growth. Asset class performance patterns Looking at the performance of stocks. changes in these key indicators historically have provided a relatively reliable guide to recognizing the different phases of an economic cycle. bonds.The business cycle approach to investing .S.. there are four distinct phases of a typical business cycle (see graph below): Early-cycle phase: Generally a sharp recovery from recession. in a mid-cycle expansion in late 2012. Corporate pro its decline and credit is scarce for all economic actors. Recession phase: Features a contraction in economic activity.Fidelity Investments https://www. while sales growth improves signi icantly. Inventories tend to build unexpectedly as sales growth declines. Inventories and sales grow. particularly changes in three key cycles—the corporate pro it cycle. Speci ically. There is not always a chronological progression in this order. but certain patterns have tended to repeat themselves over time. 2 of 8 24/8/2556 11:39 . reaching equilibrium relative to each other. Note: This is a hypothetical illustration of a typical business cycle. Please see endnotes for a complete discussion. While unforeseen macroeconomic events or shocks can sometimes disrupt a trend.. In general. while less economically sensitive assets include Treasury bonds and cash. probabilistic approach makes it possible to identify—with a reasonable degree of con idence—the state of the business cycle at any point in time. Fluctuations in the business cycle are essentially distinct changes in the rate of growth in economic activity. Late-cycle phase: Emblematic of an “overheated” economy poised to slip into recession and hindered by above-trend rates of in lation. The business cycle has four distinct phases. industrial production). gross domestic product. then an accelerating growth rate. and cash from 1950 to 2010. Economic activity gathers momentum. tightening credit availability. Source: Fidelity Investments (AART). Monetary policy becomes more accommodative and inventories gradually fall despite low sales levels.g. Mid-cycle phase: Typically the longest phase of the business the performance of economically sensitive Historically. Credit begins to expand amid easy monetary policy. the credit cycle. Economically sensitive assets include stocks and high-yield corporate bonds. marked by an in lection from negative to positive growth in economic activity (e. and pro itability is healthy against an accommodative— though increasingly neutral—monetary policy backdrop. with the U. Business inventories are low. and deteriorating corporate pro it margins.

" to the right). has tended to be fairly strong though not as robust as in the early-cycle phase. defensive assets such as investment-grade bonds and cash-like short-term debt have experienced the opposite pattern.. performance outliers carry greater weight and can skew results. assets such as stocks tends to be the strongest when growth is rising at an accelerating rate during the early cycle. both the magnitude and frequency of out- and underperformance have been 3 of 8 24/8/2556 11:39 . the leadership of economically sensitive assets has typically tapered. A hallmark of this phase is that hit rates against the balanced benchmark are the most de initive. and the rebound in corporate earnings. 30. stock market performance. In the early cycle. while bonds and cash have continued to post average annual returns of 6% and 4% in the mid cycle. and then takes the midpoint of those observations. On an absolute basis. which may give investors greater conviction to overweight riskier assets and underweight more defensive asset classes during the early cycle. stocks have exhibited the greatest outperformance in the early cycle. longer holding periods). removing the possibility that outsized gains during one period in history in luence overall averages. and all data are annualized for comparison purposes. the mid-cycle phase tends to be signi icantly longer than any other phase of the business cycle. while underweighting those asset classes that tend to underperform. the mid-cycle pattern of performance relative to the strategic allocation is similar to that of the early cycle. This method suffers somewhat from small sample sizes. and 10% cash (see "Analyzing relative asset class performance. This measure is indifferent to when a return period begins during a phase. This method better captures the impact of compounding and performance that is experienced across full market cycles (i. 40% bonds.S. Investors can implement the business cycle approach to asset allocation by overweighting asset classes that tend to outperform during a given business cycle phase. with the broad market enjoying a 26% average annual total return during this phase (see graph. Stocks have typically bene ited more than bonds (6%) and cash (4%) from the backdrop of low interest rates. Cash – Barclays U.. Relative to the long-term strategic allocation. as well as the reliability of those historical performance patterns (see the Relative to balanced benchmark chart below). Early-cycle phase Lasting an average of 13 months. This measure represents the consistency of asset class performance relative to the broader market over different cycles. both on an absolute basis and using several measures relative to a long-term strategic allocation to a balanced benchmark portfolio of 50% stocks. Asset classes represented by: Stocks – Top 3. Full-phase average performance: Calculates the average performance of an asset class in a particular phase of the business cycle and subtracts the performance of the benchmark portfolio.Fidelity Investments https://www. Bonds – Barclays U. stocks ranked and weighted by market capitalization. Treasury Bills Index (1–3 Month).S. with their highest returns during a recession and the weakest relative performance during the early cycle. This method mutes the extreme performance differences of outliers.S. Aggregate Bond Index for 1976–2010. up and right).000 Long-Term Corporate Bond Index for 1950–1975.S. at 15% per year on average. Cycle hit rate: Calculates the frequency of an asset class outperforming the benchmark portfolio over each business cycle phase since 1950. which makes it a good measure for investors who may miss signi icant portions of each business cycle phase. Measured by average and median differences as well as hit rates. Analyzing relative asset class performance Certain metrics help us evaluate the historical performance of each asset class relative to the strategic allocation by revealing the potential magnitude of out- or underperformance during each phase. Source: Fidelity Investments (AART) as of Apr. we consider asset class performance patterns across the phases of the business However. and there is signi icant potential to enhance portfolio performance by tilting exposures to the major asset classes based on shifts in the business cycle. while bonds and cash have experienced the deepest underperformance (see graph below). the irst signs of economic improvement. the investor using this approach would overweight stocks and underweight bonds and cash. and also underemphasizes the impact of compounding returns. the early phase of the business cycle has historically produced the most robust stock performance on an absolute basis.The business cycle approach to investing . 2010. for example. In the analysis that follows. Business cycles since 1950 are represented. As the economy moves beyond its initial stage of recovery and growth rates moderate during the mid cycle. By contrast. then moderates through the other phases until returns generally decline during recessions. with Mid-cycle phase Averaging 38 months. However. Median monthly difference: Calculates the difference in the monthly performance for an asset class compared to the benchmark portfolio. 66% IA U.S.. Intermediate-Term Government Bond Index and 34% IA U. with bonds and cash trailing stocks. This phase is also when most stock market corrections have taken place. Asset allocation decisions are rooted in relative asset class performance.

Asset classes represented by: Stocks – Top 3. Recession phase The recession phase has historically been the shortest.S. Sector performance rotations within asset classes Similar patterns of relative performance can be Equity sector relative performance has 4 of 8 24/8/2556 11:39 . gaining 6% per year on average. bonds have tended to do well in the recessionary phase. Intermediate-Term Government Bond Index and 34% IA U. On an absolute basis. declining an average of 6% per year on an absolute basis. lasting nine months on average from 1950 to 2010.. Late-cycle phase The late-cycle phase has an average duration of 17 months. Treasury Bills Index (1–3 Month). albeit with only moderate hit rates.S. The rising interest rates that typically accompany this phase of the business cycle tend to weigh on the performance of longer-duration bonds which.. Source: Fidelity Investments (AART) as of Apr. the late cycle has the most mixed performance relative to the strategic allocation. economically sensitive stocks have tended to do well in the early. assets that are more economically sensitive fall out of favor and those that are defensively oriented move to the front of the performance line.and mid-cycle phase.S. interest rates rise. more muted.Fidelity Investments https://www. justifying more moderate portfolio tilts than during the early phase. but persistent out- or underperformance can still be observed. and the opposite for stocks.S. in lationary pressures build. stocks have performed better than both cash and bonds during the late cycle. See Annualizing relative asset class performance on page 3. and the hit rates and relative performance are the lowest of the expansion phases.The business cycle approach to investing . lags the absolute returns to shorter-duration cash. 30. most notably in the high frequency of outperformance for bonds. Cash has continued to play a defensive role. 2010.S. and performance has been mixed during the late-cycle phase. while the falling interest-rate environment typically seen during recessions acts as a major tailwind for bonds. average stock performance at 6% per year is roughly in line with cash. Bonds – Barclays U. Long-Term Corporate Bond Index for 1950– 66% IA U. Aggregate Bond Index for 1976–2010. This phase of the business cycle tends to favor a high conviction in more defensive allocations. Cash – Barclays U. As economic growth stalls and contracts. Relative to a balanced benchmark. and investors start to shift away from economically sensitive areas. Performance patterns relative to the strategic allocation have been signi icantly different in recessions than in the other three phases. only 11 full cycles during the period. Cash positions also enjoy their best performance relative to the balanced benchmark. at 4% per year on average. but the inde inite frequency and magnitude of relative performance warrant a more neutral risk allocation. The stock market has performed poorly during this phase. As the recovery matures. stocks ranked and weighted by market capitalization. In U. Across the asset classes. which post their most robust gains of 13% per year on average.

Barclays U.S. while more defensively oriented sectors such as consumer staples and health care have historically exhibited better performance during the more sluggish economic growth in the late-cycle and recession phases (see graph to the right and How to invest in sectors using the business cycle). the NBER’s dating scheme has historically offered solid opportunities for active asset allocation. High Yield Corporate Bond Index for 1950–1985. expansion or contraction. High-Yield Bonds – Bank of America/Merrill Lynch U. Unshaded = no clear relative performance pattern. high-yield corporates have averaged 19% annual gains during the early cycle. 1 The economic sensitivity of high-yield bonds has caused them to behave more like equities than investment grade bonds. Within equity markets. likely due to the fast pace of asset market price movements. when interest rate–sensitive investment-grade bonds have returned 13% per year on average. See endnotes for sector tended to do better in the early phase of the cycle. but have been roughly lat in recessions.S.Fidelity Investments https://www.S. Other business cycle approaches Some approaches feature economic indicators as important drivers. 66% IA U. frequent portfolio composition changes often generate higher turnover and transaction costs. The National Bureau of Economic Research (NBER) is generally considered to be the of icial arbiter of U. and they can be susceptible to false signals based on temporary investor optimism or pessimism. comparing the performance of credit and interest-rate sensitive bonds across the phases illustrates that business cycle–based asset allocation within a ixed income portfolio has considerable potential to generate active returns (see graph to the right and down). 5 of 8 24/8/2556 11:39 .The business cycle approach to investing . Many ixed income categories that are fairly new to the marketplace have limited history and hence smaller sample sizes that make historical performance analysis less useful.S. while academic research has shown that asset allocation decisions can be responsible for anywhere between 40% and 90% of return variability among portfolios. while less economically sensitive areas—such as government and other investment-grade bonds—have done relatively well in slowdowns and recessions.. For example. the binary approach is not granular enough to catch major shifts in asset price performance during the lengthy expansion phase. Aggregate Bond Index for 1976–2010.S. For instance. Merits of the business cycle approach There is generally broad agreement among many academics and market participants that economic factors in luence asset prices. Second. 30. Long-Term Corporate Bond Index for 1950–1975. tended to be differentiated across business cycle phases. Bond market sectors have also exhibited economic sensitivity. More credit-sensitive ixed income sectors—such as high-yield corporate bonds—have Source: Fidelity Investments (AART). which at times has shifted through all four phases in a one- or two-year period. Other asset allocation paradigms also include market-based asset price signals. some may have a strong theoretical backing but lack the ability to be practically applied. Because recessions have generally experienced signi icant differentiation among asset class performance relative to the rest of the cycle.S. there is still debate over the best way to incorporate economic factors into asset allocation approaches. Intermediate-Term Government Bond Index and 34% IA 2010. more economically sensitive sectors such as technology and industrials tend to do better in the early- and mid-cycle phases. Source: Fidelity Investments as of Apr. First. However. de initions. many of these economic approaches have signi icant shortcomings.. one prominent strategy uses earnings yield—a function of corporate pro its and stock prices—and recent stock market returns as primary inputs to an asset allocation model. However. Those strategies based more on asset price movements also have a greater likelihood of being whipsawed by price volatility. often relying on data that are revised frequently or not released on a timely basis. High Yield Master II Index for 1986–2010. which reduces the potential for capturing active returns. For instance. such as equity sectors or different credit qualities in the ixed income universe. Asset classes represented by: Investment-Grade Bonds – Barclays U. and its methodology tends to be either wholly or partly borrowed by market participants. One of the most widely used paradigms for economically linked asset allocation decisions is to specify the economy as being in one of two states. While such strategies may capture more trading opportunities than the more economically based models. These tend to shift phase identi ications more quickly than models based purely on the economy. identi ied across sectors of the major asset classes. recessions. the NBER announced the beginning of the most recent recession a full 12 months after the fact.

Business cycle still relevant The period since the 2008 inancial crisis has been marked by post–housing bubble deleveraging and a lackluster economic recovery. As demonstrated above.. Our approach is best-suited to strategies with an intermediate-term time horizon and a lower ability or willingness to trade into and out of positions quickly. it shifted into the early-cycle phase. the stock market underwent a sharp correction. thus providing more scope for generating active returns. such as natural disasters. While the nature of this post-crisis era does have signi icant differences with other periods since World War II.S. Japan’s slow pace of growth since 1990 has made its economy more inclined to move quickly through the business cycle phases and more frequently into and out of recession.S. whose frequent shifts can whipsaw investors during periods of high volatility. Third. high-yield corporate bonds. broader indicators such as GDP growth. Today in the U. our analysis showed that the U. the provisioning of credit throughout the economy. Meanwhile. We focus on economic indicators that are most closely linked with asset market returns. this approach captures more frequent phases than the two-state NBER strategies. A number of factors may make an economy more susceptible to such a shock. Our business cycle dating scheme measures high quality indicators that have a greater probability of representing economic reality and are not dependent on perfect hindsight. The levelheaded nature of our quantitative. typically only shifting over periods of several months or longer. For instance.S. there is a large differential in asset performance across the various phases of the business cycle. as investors’ nerves were frayed by the combination of the sovereign debt crisis in the eurozone and the rancorous debt-ceiling debate in the U. the approach focuses on critical drivers of relative asset performance. Germany’s dependence on exports makes its business cycle more susceptible to changes in the global business cycle. Since the transition of the business cycle to the mid-cycle phase in the spring of 2010. economy began to exit the recession in the irst half of 2009.. Investment implications As a result. geopolitical events. Despite those headwinds. which is a common pitfall suffered by many investors. which accordingly coincided with more muted but continued outperformance of stocks. complementing the business cycle approach with additional strategies may further enhance the 6 of 8 24/8/2556 11:39 . Subsequently. In Deteriorating sentiment and other indicators gave rise to fears of falling back into recession. our business cycle approach has limitations. and understanding these limitations is critical to using the framework appropriately as part of an investment strategy. but historical analysis has shown a relatively low correlation between GDP growth rates and stock or bond market investment rates of return. called the extrapolation bias.The business cycle approach to investing . and inventory buildups or drawdowns across various industries. For example. and cash has held steady around 0% from May 2010 to October 2012. Our approach to business cycle investing Our quantitatively backed. with a relatively low risk of returning to recession. the broad contours of the business cycle so far con irm that the business cycle approach is a relevant tool for today’s environment. intermediate-term fundamental trends. Some alternative asset allocation approaches center on forecasting gross domestic product (GDP) and inferring asset market performance from those forecasts. tangible measures such as inventory data are less likely to be revised or present false signals compared to other. the deceleration in economic growth in mid-2010 marked the shift into the mid-cycle phase.. We use a disciplined. or major policy actions.2 The role of exogenous shocks Like any other approach. a potential shock from the relatively weak global economy could negatively affect the U. the cycle phases we employ are grounded in distinct. relative asset class performance has been consistent with past patterns: Stocks have posted average annual total returns of 13%. but that trend can always be disrupted by an exogenous shock. we employ a practical and repeatable framework that provides a solid foundation and can be applied more consistently. Second. and the strong returns of stocks and other economically sensitive asset categories were consistent with the historical early-cycle experience. and asset markets rallied into the end of the year. bonds have returned 6%. leading some investors to question the value of investment frameworks based on typical pre-crisis Identifying the current phase of the business cycle determines the underlying trend of economic activity. such as corporate pro itability. A key to identifying the phase of the cycle is to focus on the direction and rate of change of key indicators. rather than the overall level of activity. On the other hand. the relatively slow pace of expansion likely makes the economy more exposed to shocks that could disrupt the underlying cycle than it was during the stronger growth environments of the past few decades. This approach unfolds more slowly than tactical approaches. model-driven approach that helps minimize the behavioral tendency to pay too much attention to recent price movements and momentum. cycle. economy remained in the mid-cycle phase of the business cycle. probabilistic approach encompasses a number of key attributes: First. including a relatively slow pace of expansion or a heavy dependence on other economies or external drivers of growth. model-driven framework proved to be correct: Economic conditions softened but held up well.S.Fidelity Investments https://www. As the U.S. and other economically sensitive assets. In addition.

the opinions provided are those of the authors and not necessarily those of Fidelity Investments. the securities must be ixed-rate. government-related and corporate securities. In lationary pressures are typically low. it may make sense to take fewer active allocation tilts and more security selection bets. Roger G. govern¬ment bonds.. or the mid-cycle for equity sector relative performance. are rated investment grade.S. and cash. Cash – Barclays U. vol. and have $250 million or more of outstanding face value. by using a disciplined business cycle approach. Research stocks. bonds. Barclays U. Every business cycle is different. 1 (January/February): 26–33. Bonds – Barclays U. dollar–denominated. Source: Fidelity Investments (AART) as of Oct. High Yield Corporate Bond Index includes publicly issued U. You cannot invest directly in an index. and the yield curve may eventually become lat or inverted. 31. and ETFs. and the yield curve is steep. Sectors include Treasuries.) Fixed income securities also carry in lation. the economic expansion matures. Eventually. and Paul D. Economically sensitive asset classes such as stocks tend to experience their best performance during the cycle. or economic developments.S. performance differences have been less pronounced during the late-cycle phase among stocks. market value–weighted benchmark that measures the performance of the investment-grade. bonds. it is still possible to identify key phases in the economy’s natural ebb and low. Endnotes 1 Ibbotson. or 100 Percent of Performance?” Financial Analysts Journal. Another possibility is to analyze the domestic business cycle combined with the business cycles of major trading partners or the entire world. and CMBS. regulatory. The value of your investment will luctuate over time and you may gain or lose money. Aggregate Bond Index. market. business cycles have varied between two and 10 years in the U.S. the economy bottoms and picks up steam until it exits The Typical Business Cycle depicts the general pattern of economic cycles throughout history.S.S. 56. and there have been examples when the economy has skipped a phase or retraced an earlier one.S.000 U. Less economically sensitive asset categories tend to hold up better. and so are the relative performance patterns among asset categories. based on the information available at that time. 90.S. dollar–denominated. Using additional complementary strategies may be particularly relevant during phases when the relative performance differential from the business cycle framework tends to be more muted. During these phases. MBS (agency ixed-rate and hybrid ARM pass-throughs).S. Stock markets are volatile and can decline signi icantly in response to adverse issuer. Kaplan..S. 2 Performance for stocks. Aggregate Bond Index is a broad-based. Bank of America/Merrill Lynch U. This effect is usually more pronounced for longer-term securities. Treasury Bills Index (1–3 Month) includes all publicly issued zero-coupon U. For example. Long-Term Government Bond Index is a custom index designed to measure the performance of long-term U. the economy exits recovery and enters into expansion. and cash from May 2010 to Oct. In lationary pressures typically begin to rise. in lationary pressures continue to rise.. taxable corporate bonds that have a remaining maturity of at least one year. Views expressed are as of the date indicated. Keep in mind that investing involves risk.S. ixed-rate taxable bond market. nonconvertible. Consumer Staples – Companies whose businesses are less sensitive to economic cycles.S. Stocks – Top 3. and the yield curve experiences some lattening. Unless otherwise noted.. equity funds. non-investment-grade. 2012. Fidelity does not assume any duty to update any of the information. the economy contracts and enters recession. below-investmentgrade–rated corporate debt publicly issued in the U. U. (As interest rates rise. Index de initions Barclays U. and default risks for both issuers and Investment decisions should be based on an individual’s own goals. In general the bond market is volatile. High Yield Master II Index tracks the performance of U.S. time horizon. “Does Asset Allocation Policy Explain 40.S. Barclays U. nor is there always a chronological progression in this order. and denominated in U. Please note there is no uniformity of time among phases. though each cycle is different. Treasury Bills that have a remaining maturity of more than one month and less than three months. 7 of 8 24/8/2556 11:39 . Past performance is no guarantee of future results. the typical business cycle demonstrates the following: • During the typical early-cycle phase. monetary policy is accommodative. In general.Fidelity Investments https://www. For example. no. bond prices usually fall. Treasury Bills Index (1–3 Month). • During the typical mid-cycle phase. IA U. References to speci ic investment themes are for illustrative purposes only and should not be construed as recommendations or investment advice. Intermediate-Term Government Bond Index is a custom index designed to measure the performance of intermediate-term U. dollars. tactical shifts in portfolio positioning may be used to mitigate the risks or opportunities presented either by the threat of external shocks or by major market moves that may be unrelated to changes in the business cycle.S. and tolerance for risk.S. ability to generate active returns from asset allocation over time. Use Portfolio Review to see if your investment mix is in line with your long-term goals. with monetary policy shifting from tightening to easing. All indices are unmanaged. characterized by broader and more self-sustaining economic momentum but a more moderate pace of growth. S&P 500® sectors are de ined by Global Industry Classi ication Standards (GICS®) as follows: Consumer Discretionary – Companies that tend to be the most sensitive to economic cycles. • During the typical late-cycle phase. and the business cycle approach to sector investing. 2000. Learn more Find more coverage of the business cycle. domestic market that has a remaining maturity of at least one year. However. political. ABS. dollar–denominated. but their relative advantage narrows.S. particularly right before and upon entering recession. stocks ranked and weighted by market capitalization. Portfolio Review is an educational tool. IA U. credit. in order to capture more of the exogenous risks facing an economy. monetary policy becomes tighter. and vice versa. then begins the recovery as activity accelerates. These signals can provide the potential to generate active returns from asset allocation over an intermediate-term investment horizon. For instance.S. ixed-rate. 2012.The business cycle approach to investing . corporate bonds. In addition.S. Diversi ication does not ensure a pro it or guarantee against loss. Economically sensitive asset classes tend to continue bene iting from a growing economy. and may change based on market and other conditions. and ixed income securities carry interest rate risk.

Health Care – Companies in two main industry groups: health care equipment suppliers. Information Technology – Companies in technology software & services and technology hardware & equipment. and companies involved in research. drilling equipment. Industrials – Companies whose businesses manufacture and distribute capital goods. and real estate. SIPC. Utilities – Companies considered electric. coal. marketing.Fidelity Investments https://www. gas. provide commercial services and supplies. and/or transportation of oil and gas products. cellular. and other energy-related services and equipment. asset management.6.S. and providers of health care services. and consumable fuels. 8 of 8 24/8/2556 11:39 . Smith ield.. or the exploration. production. SIPC. RI 02917 632421. only. high bandwidth. including REITs. including seismic data collection. production.. or water utilities. All Rights Reserved. 900 Salem Fidelity Brokerage Services LLC.0 Mutual Funds ETFs Fixed Income Bonds CDs Stock Research Online Trading Annuities Life Insurance 529 Plans IRAs Retirement Products Retirement Planning Small Business Retirement Plans Stay Connected Locate an Investor Center by ZIP Code Facebook Twitter YouTube Fidelity Mobile ® Careers News Media Inside Fidelity International Copyright 1998-2013 FMR LLC. Products and services are provided through Fidelity Personal & Workplace Investing (PWI) to investors and plan sponsors by Fidelity Brokerage Services LLC. and/or iber-optic cable networks. Terms of Use Privacy Security Site Map This is for persons in the U. Smith ield. Telecommunication Services – Companies that provide communications services primarily through ixed line. investment banking and brokerage. Member NYSE. Member NYSE. re ining. manufacturers. and marketing of pharmaceuticals and biotechnology products. RI 02917. insurance and investments. wireless. 900 Salem Street. Materials – Companies that are engaged in a wide range of commodityrelated manufacturing.The business cycle approach to investing . Financials – Companies involved in activities such as banking. or provide transportation services. or companies that operate as independent producers and/or distributors of power. Energy – Companies whose businesses are dominated by either of the following activities: the construction or provision of oil rigs. consumer inance.

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