Fidelity live | The light at the end of the tunnel

Fidelity live | The light at the end of the tunnel

COVID working group | Part 2

As Europe teeters on the brink of a second lockdown, restrictions are finally easing for others. But wherever you are, the future remains uncertain. Just when will this thing go away? And when it finally does, what then?

Watch Ned Salter, Head of Equities as he looks at what a post-COVID world might look like and some of the plans underway to help us get there. Ned is joined by members Dr Judith Finegold our London-based COVID working group co-lead who also has dual responsibilities as an Analyst and Portfolio Manager, Mohit Mandhana, our Singapore-based Analyst for Asian healthcare, and Amit Lodha the Portfolio Manager for the Fidelity Global Equities Fund.

Andrew Dowling:

Well, good afternoon everybody. My name is Andrew Dowling and I'm part of Fidelity's wholesale sales team. We appreciate you taking the time to join us for part two of our C0VID conversation, The Light at the End of the Tunnel. As Head of Equities, Ned Salter leads us through our discussion on what a post COVID world might look like, and some of the initiatives underway to help us get there. Today's discussion is scheduled for 45 minutes. You're welcome to submit questions throughout the conversation via the Q&A module. It's located at the bottom of your screen on your desktop or the bottom of your screen on mobile and tablet devices. I should also mention that the CPD points will also be available within 10 days and on that note, over to you, Ned.

Ned Salter:

Thanks, Andrew. Appreciate the introduction. Hi everybody, really nice to meet you all virtually. As Andrew mentioned, my name is Ned Salter. I'm the Head of Equities here at Fidelity International. I have two roles and I haven't had the opportunity to meet many of you. But I have two roles at Fidelity. The first is that I'm the Head of Global Equity Research which means that I'm responsible for the equity research teams around the world. Obviously, organised by both region and by sector. And that responsibility is one that I've had for a long time. Originally, having been an equity analyst myself, and sector portfolio manager have been in the equities business for 20 years. I'm happy to share all of my successes and failures very publicly in Q&A, if that's ever of interest. But another part of my role is that I'm the head of Equities for Asia Pacific ex-Japan. And so, in that capacity, manage the portfolio managers throughout the Asia Pacific region.

Ned Salter:

I'm American by birth, I'm British by choice, and I'm a Hong Kong resident now by some good fortune, given that Hong Kong seems to be managing through the COVID crisis fairly successfully. I've just come in from the U.K. and finished my 14-day quarantine which was quite an experience. It must be said. I'll give you a brief introduction to the COVID-19 working group here at Fidelity. This is a multi-disciplinary task force that was formed at the end of March, beginning of April of this year. It was really an opportunity for us to bring a group of investors from around the world together to really define the parameters by which we analyse the COVID-19 crisis, not just as an intellectual pursuit, although clearly that's part of it, and you have at least two of the thought leaders here with us today, but also as a practical pursuit. To be able to provide guidance, advice, and thought leadership to the portfolio management functions here at Fidelity.

Ned Salter:

Putting the group together was an interesting thing. There's a handful of people that offered to participate in the group. On the call today, you'll meet two of our senior healthcare investors, but I really also want to make the point that the group is not only made up of healthcare investors. And in fact, some of the great contributions that we've had, I've been helping to frame the macro economic debates, the policy responses, and obviously, clearly, medicine is a key component of what the working group does. I'll spend a minute to introduce the panellist today that we have with you.

Ned Salter:

The first is Dr. Judith Finegold who is on the call. Judith is a senior investor, she's an analyst and a portfolio manager based in our London office. She joined us from INSEAD after graduating with her MBA, but she's not any traditional MBA necessarily. Prior to pursuing her MBA, she was a doctor both a practising physician and a research physician with the NHS in the United Kingdom. Judith specialises and is passionate in the field of biotech but is broadly responsible as well for our healthcare practise across Fidelity, and is the co-portfolio manager on our healthcare strategies, and is one of the leaders of the COVID-19 working group.

Ned Salter:

You will also have Mohit Mandhana, a senior analyst based in our Singapore office and is an Asian healthcare analyst but also with some expertise and some coverage in U.S. healthcare as well. Mohit's covered a variety of sectors across consumer and healthcare in his investment career, and is someone who I think is really exceptional at thinking laterally. Mohit has a lot of thematic ideas, not just sectoral ideas, and can bring that experience to bear, and is also an individual who's passionate about sustainable investing which is relevant to the discussion that we can have today.

Ned Salter:

Last but not least, we're joined by Amit Lodha. Portfolio Manager Amit has more than two decades of investment experience. He joined Fidelity as a research analyst, I think in Mumbai in the year 2004, but has had a varied and successful career here at Fidelity. Moving to London in 2007, covering a variety of sectors across commodities, and basic materials, managing sector funds through 2008 and 2009, I believe into almost all the through to 2016. But in October 2010, Amit took over the management of global equities and global focus. I think it's also worth celebrating Amit's 10 year anniversary which I believe was on the 1st of October, running that strategy, so congratulations to Amit. Thank you all three for joining us today, and for Amit and Judith, it's very early in the U.K. so thanks again for getting your coffee on board, early doors.

Ned Salter:

The agenda is, we will have a few minute introductions from each of our panellists and at that point, we will turn it over really to Q and A. And I can see that some questions have come through. We've received some questions in advance. We'll try to make this as interactive and dynamic as possible. So that's the agenda for today. With that, I'll hand it over to you Judith.

Judith Finegold:

Thanks, Ned. Good morning, good afternoon everyone. I thought that what would be helpful is maybe just to talk a little bit about where the working group started from, and also what we're focusing on. Now, as Ned said, I'm one of the leaders of the working group, but actually, I actually started working on COVID about January time, obviously when the disease started to really flare up in China. And the idea came could this actually become the global pandemic that we've all been preparing for and thinking about for the whole time that I was working in hospitals. Unfortunately, it has become. But when I think back to that initial time, what really strikes me is the difference in the information that we had then, versus what we have now.

Judith Finegold:

So I remember working with Amit and talking with him and trying to work out how we could potentially model, how big this pandemic could be, and how severe could it be. Now, if I think about the epidemiology of work that we do, we do have analysts and scientists looking at the epidemiology and different geographical areas on a regular basis. Even despite our analysts, the amount of information that's available out there, compared to the information that was available in January, February when there was no testing, no real diagnostics. It's a huge difference now in the ability that we have to track this pandemic. Similarly, when we first started thinking about vaccine, therapeutics, would Remdesivir work, would an antiviral work? The amount of information, the quality of information, and the resources we have available now is so different that actually, we really need to focus the COVID working group on kind of almost now, sorting out the noise, and making sure that Fidelity has really well-rounded view and unbiased interpretation of where COVID's working, or where this pandemic could go.

Judith Finegold:

Just a final thing I'm going to add before handing over to Mohit is maybe some of the recent events that we've done as a working group, I think one really notable one that we did two months ago was we did the vaccine deep dive. We spoke to Vaccine [inaudible 00:08:13], key opinion leaders, doctors or researchers. And also we were very privileged at Fidelity to have really good corporate access so we spoke to all the corporates, really that are involved. We continue that dialogue, on a far too frequent basis I would say, just to make sure that we're really on top of all the noise and the information that's out of that. So with that, I'm going to pause and hand over to Mohit. Thank you.

Mohit Mandhana:

Thanks, Judith. Hi everyone. My name is Mohit. I cover healthcare sector for Asian countries, ex-China. My responsibility as COVID working group member has been to keep our team posted on what is happening in different countries in Asia, in terms of different aspects of COVID. If you look at situation in Asian countries, obviously China has done a great job of controlling the infection, but if you look at Asian countries ex-China, picture is not very uniform. So, it's difficult to over simplify this. Some countries have done very well in terms of controlling infections, and some countries have struggled so far.

Mohit Mandhana:

For instance, Korea, Thailand, Vietnam have done very well because of strong measures. They have taken in terms of lockdown, testing, contact tracing, etc. Countries such as Korea, Thailand, Vietnam are now seeing almost negligible new cases, and life is pretty much normal there with the exception of international travel. Some countries in Asia such as India, Indonesia, Philippines have been struggling in terms of controlling the infection. But economic activities even in these countries are still happening in a near normal manner apart from lockdown in specific hyper local regions. This is simply because these countries are very poor, and cost of economic hardships is simply way too much.

Mohit Mandhana:

In countries like these, it was very difficult. Wait for vaccines or good therapeutics, as an average person do not have savings to last beyond a few days. What we are seeing is whether infection is under fully control or not in control in Asian countries. Most of these countries are actually opening more and more businesses, and economy or all in Asia is generally, gradually opening up. So, I'll take a pause and hand it over to Amit.

Amit Lodha:

Thanks, Mohit. Pleasure to be with all of you today. I thought I'd do a quick recap of how I work with the COVID working group. And as Judith mentioned, we were talking about COVID literally in February because my last trip for this year was to Shanghai for the China conference. It's been a really interesting year because in March, I remember we were looking at how big this pandemic could possibly be, seeing the flow of the disease really moving from China to Iran to Italy. And it was probably the most morbid period, as we would wake up everyday and focus on the death status stakes and the spread analysis.

Amit Lodha:

I think in April and May, the group moved on to talking about diagnostics, concurrently through this entire period we've been tracking the vaccines, thinking about the solutions to this problem and how we will manage through it. And now, if I focus on in what the group is thinking about, we're thinking about logistics, which is once we find the vaccine, how will it be shipped in around the world, how will it be administered, how will we make all the things that require to make this work, work.

Amit Lodha:

We've also been spending a lot of time thinking about the long term ramifications of this, not only on healthcare and how this will change the healthcare sector, but the impact across sectors. I hope we can cover some of that during the Q&A. The group has consistently helped me keep ahead in terms of what the market is thinking. As Mohit mentioned, the countries spread and the difference between different countries, for a global PM, that's incredibly important, whether Singapore or Korea or Taiwan are having a good crisis versus the U.S., U.K., or India not having a great crisis, are pretty important from a portfolio construction perspective.

Amit Lodha:

I think the true value of the group for me really has been in the pandemic that we don't share enough about which is the pandemic of fake news, fake medicines, fake news journal articles. Does the virus react to heat? Does this vaccine work? Does this BCG vaccine work? I mean, there is so much fake news out there. I think half knowledge is very, very dangerous. Judith, Mohit, and the entire COVID working group have been really exemplary in responding to all the queries that everyone from the portfolio management group, including me, throughout them, helping us sort through the news, the noise, what is information and what is knowledge, and what is really insights.

Amit Lodha:

I think, to me, that has been the true value of this group over the last six, eight months that we've been all working together. All this has helped frame the portfolio structure in a time where we have no real historical precedence. We can talk a bit more about that in the Q&A and why it's so far this year has been really good for the portfolio both from an absolute and relative to the market basis. With that, I'll hand it over back to Ned.

Ned Salter:

Thanks, Amit. That was really helpful context. For those of you, please don't be shy to ask your questions. I'll try to get to them as we go through the Q&A. So type any questions you might want into the Q&A app. I guess, Amit, maybe we'll pick up where you left off. You mentioned how the COVID working group has helped you as a portfolio manager. I'm keen to understand how did the work that the COVID working group do... help from a portfolio positioning strategy. How did it help you identify the risks and the opportunities in your client portfolios?

Amit Lodha:

Thank you, Ned. In March, I did try to note on this. When Judith and I were discussing the virus, we all had timelines of how we will see this coming through, but there was so much uncertainty. I think managing a portfolio in a time of uncertainty requires a different lens to the normal lens that you use. We almost always invest with incomplete information. This period was pretty much unprecedented. And so, what I did for my portfolio is, I basically divided it in to three buckets. Bucket number one were stocks which would gain from the virus, which is things which would do well when we stayed at home, watch video games, or play video games, watch Netflix, things like that, or Telehealth for example which work very well in that phase.

Amit Lodha:

Phase two in my view is the recession phase. Now, this to me is almost a wartime like scenario. In wars the recession happens after the war. And so, you have to have something in the portfolio which would protect in event of a recession. So these are like the consumers staple companies, the utilities which tend to have stable earnings irrespective of the macro economic dynamics.

Amit Lodha:

And then, third part of the portfolio is during the recovery side which is companies which will tend to do well, stocks which will tend to do well when we eventually see the recovery in financial markets. And what I found so interesting is that having that diversified strategy on the portfolio has already helped, because if you and I were sitting in October of 2019 and you had told me with your foresight that there is a virus coming, it is going to put everything in all economies to stop, you, Amit will never go back to your office from February right up until October, I bet you I would not have said, "Well, Ned, the Nasdaq's going to up 30%." So, I think having that understanding that this is an uncertain period where we don't have the write answers, having a balanced, diversified strategy of how we want to navigate this environment with the focus on valuations, I think has really helped in framing this period and I think has helped in how the portfolio has actually navigated this environment.

Ned Salter:

That's helpful and great to know that it's impacted the client portfolios. I think, just to follow on I guess. Amit, do you think... Obviously, I know your answer to this because we talked about it a lot but to what extent do you think this is a differentiated approach that we're taking? To what extent do you think that this amalgamation, this combination of investors has produced differentiated research and differentiated insights. You talked about avoiding fake news, that can be one part of it. Do you think it's truly differentiated?

Amit Lodha:

I think what is always a great part of research, is diversity of perspectives. And as a global PM, I really see it all the time, when I talk to Mohit versus Judith versus Yan Ling. You see the diversity of perspectives in the healthcare team. I think that diversity really enhances the tapestry of the investment thesis that you're trying to create. I think that, I found, has been our biggest edge in some ways, where we've always been able to see both sides of what's going on, where one person's saying this vaccine's going to work and we can also, from a portfolio management perspective, see the discussion within the team in terms of why these things may not work in the way that we expect them to work. I think that balance, getting both the bull and the bear, I think has been really, really important in terms of navigating this period. I doubt we'd have been able to do it without that diversity of opinions that we are so lucky to enjoy.

Ned Salter:

That's really helpful. I think now, let's move to one of the burning questions which has come in a few times on the Q&A app. This is one I expected to, we'll hand in the first instance to Judith, but I think Judith one of the questions that everybody is wrestling is this vaccine, it's existential. Do we have a view on which vaccine is going to be the big winner and which one's commercially viable? What's your view on that given all the news that we're reading each day?

Judith Finegold:

I mean, I think we took the perspective early on in the vaccine development, that this was an unprecedented speed of vaccine development that we were seeing. Normally, if you think about timeline for a vaccine to get to the market, you're looking between five to 10 years. They're normally quite slow development. By the time you get to a phase three trial, you'll have done so much work in the vaccine. You really know it pretty well, then the chance of success of that vaccine trial is actually much higher than most late stage trials. Flipped on it's head and that's what we're doing with COVID so we're rushing lots of vaccines straight into the clinic but we're doing so many of them so fast. So actually, although I couldn't necessarily pinpoint or maybe won't today, which one I'm most bullish on, just the fact that we have so many different modalities going into the clinic all at the same time point, is overall encouraging.

Judith Finegold:

The one thing I would like to highlight, and I think that we've been seeing that in the last few weeks in several trials going on pause is that, unfortunately, the vaccines that we can develop fastest are the vaccine modalities which are completely new. So when we hear in the news about Pfizer or Moderna or Astra and J&J, these are actually much newer vaccine platforms than the vaccine platforms that we're all used to having and a little bit more tried and tested. So, I do think that we really need to keep that lens into the back of our mind and also we have to understand why we may need to see a little bit more in terms of safety for when we talk about the broad roll out to them.

Ned Salter:

Tell me a little a bit, Judith, about this stop start. Is it devastating news when a trial goes on hold, or is this just part of the experimenting because we're so amped up and focused on and we typically don't see this?

Judith Finegold:

Yeah, absolutely. I mean, and also you have to read the nuances as to who stopped at which step, was it the company, was it a monitoring board, etc? If you think about, what happens in trials is if you have a safety event, any safety event, you have to write it up, and then it goes into the company. Now, if you're that trial investigator, you don't know if that's patient's on the placebo, you don't know if that patient's on the vaccine as well. Just the fact that you're getting safety events coming in, I mean, they could be placebo patients for example. Obviously, it's quite difficult for us as investors and also for the general community because we rarely get the quality of information about the safety event. But all the companies have promised the public that they will give full rundown of safety events because they really want to improve the visibility that people will have so that hopefully, when vaccines come to the market, people will feel they've had a lot of information and will feel more confident to see it.

Judith Finegold:

So I would caution about over extrapolating vaccine, single vaccine events and to be perfectly frank, if you have 60, 000 people in a vaccine trial, even completely unrelated to the drug, you're going to see events. It's just what happens in life.

Amit Lodha:

Ned, there is a good side to this. As a PM, you always look for the positives which is that, if you don't see a safety event, that's good news. If the Moderna or the Pfizer's trial has been going on for some time and it's not been stopped for any safety issue, and Judith can correct me if I'm wrong, but in my view, that's good news, as long as it's not stopped. Judith, would you agree?

Judith Finegold:

I'm laughing, Amit because I think you've been listening to me too closely because at the beginning of all of this, the thing that I was most concerned about is the safety event called ADE which is Anti-body Dependent Enhancement and that was really the biggest concern. And I was saying to Amit, actually the fact that we've got to this point with all of the vaccines and the anti-body trials in combination and not seen any ADE event is actually very reassuring from that broad, are we targeting, can we target the vaccine, this virus? That's what I was saying. So, great.

Ned Salter:

So Mohit, let me turn to you and ask a question then related to the vaccine and I'm happy for anyone else to chip in as well. Obviously, the determination of the arrival at the vaccine that's effective is going to be a big windfall psychologically and for markets as well, and for us as human beings, no doubt. What are markets thinking about the actual deployment of the vaccine? There's obviously billions of people that are going to have to be vaccinated. How are we... How is the COVID working group characterising the production and distribution of the vaccine when we get there? And I guess, what do you guys think that markets are interpreting on that basis?

Mohit Mandhana:

Sure, Ned. If you think about it, initial volumes for vaccines will be limited and not all countries are going to get it. This will especially be an issue with emerging markets. So first, the issue is that emerging markets, countries in Asia, they will not be the first ones to get the vaccine when it comes. Then there are issues, they are large countries. If you think about some of these countries, India, Indonesia, they are large countries and distribution of these vaccines is a big issue, especially considering that you need frozen infrastructure for these vaccines so you have -30 to -70 degree temperature storage versus normal vaccines, you need a cool storage, two to eight degree celsius. Distribution in such large, highly populated countries is not that easy, even if you get it.

Mohit Mandhana:

Then, you also need to think about the population databases these countries have, making sure that everyone has been vaccinated. It's not very straightforward task considering these are two days, weeks, vaccines, and you need to manage this very carefully from an IT perspective, whether everyone has been given or not. There are challenges and it's not like a silver bullet that you get it and everything is resolved in a month. How I think about this thing is that apart from vaccine, there are lot of innovations happening which are getting ignored at this point. There are innovations happening in terms of medications, therapeutics, for example, Lilly, Regeneron. These companies are very near to producing a drug where hospitalisation rate itself, goes down from less 6% to 1%. That's a big jump. If you think about it, how it helps us, your mortality rate which is already at 1%, 2% when you started this thing. The mortality rate of the disease was a double digit, now it's 1%, 2%. And these therapies, etc. when they keep coming outside of vaccine, your mortality can even go down further.

Mohit Mandhana:

On top of that, there has been innovations in terms of testing. For example, a bird has produced a test which can give very accurate results within 15 minutes. So, it opens up lot of things. A used case can be, you go to a cinema, you get tested quickly within five, 10 minutes to get accurate results, and only COVID negative people are allowed in the cinema. My view is that, yes vaccine will help, but overall distribution, implementation of the programme is not a few weeks or a one month thing. It'll take a few months. In the meanwhile, there are other innovations happening in terms of therapeutic, testing, etc. and that will also going to help a lot for us, in terms of opening up the economic activities.

Amit Lodha:

Ned, if I could just add one point over there. I agree with all Mohit said. We spoke to FedEx just last week, it's a portfolio holding. They made a point that we need 8,000 jumbo jets to move the vaccine around, whichever vaccine comes for that global distribution. And these are [inaudible 26.39]. So, the logistic challenge of doing this would be significant. I don't think the market is appropriately focused on that logistics challenge. I think the other thing though, which gave me some comfort is that, there is a difference, as Mohit talked, between the developed markets and the developing markets in one other way which is, if you look at U.K. for example, Ned, we have the flu vaccination and so there's an infrastructure for how vaccinations are administered to people in the U.S., in the U.K. because of the flu vaccination programmes that we have. In India, for example, there is no flu vaccination programme. So the only vaccinations you have in India are for children. The entire infrastructure of vaccination almost needs to be set up from the ground up.

Amit Lodha:

This kind of country level differentiations even when you're thinking about how the vaccines will progress which I think, as Mohit highlighted, is pretty important to think about.

Ned Salter:

As someone just pointed out on the chat, Amit, there are plenty of jets parked on the tarmac out there so hopefully, no shortage. It was remarkable. I landed in Hong Kong about three weeks ago, and man, they're stacked up to every end of the runway. That is a good point. I guess just picking on this then, for Judith and for Mohit, I think what you're saying effectively though, is testing is as important as the vaccine at least in the near term. Is that something that we can extrapolate in terms of resumption of economic activity?

Judith Finegold:

I think it's a combination of all three things actually. I think that testing alone isn't that great unless you have something to give people when they're sick. I think we need to take the fear out of this disease. When we look back at the beginning of the disease, we have a higher mortality rate and that was because quite frankly, people didn't know how to treat these patients. Even though ICU, they were opening the wrong kind of ventilation much earlier, turns out that's probably not the right thing to do.

Judith Finegold:

So we just need to get some drugs that if you get this disease, the mortality rate is going to go from what we think at the moment is about 0.7% but obviously much higher if you're older, down to a flu like level which is 0.1%. So if we can really get to that point then I think that is a real key trigger for removing the thread and opening up economies. Obviously, testing is part of that to diagnose these cases earlier and you get them to therapies. And then, the third part of it is the vaccines. But remember, at the moment, if you have a vaccine which is like a flu vaccine, you're not getting 100% disease prevention, you're getting about 60-70%. So even within that, you could still get 30-40% of population that could get Coronavirus and maybe a bit less severe Coronavirus, but again you still will probably need to have some therapies that are available and effective for people. So, it's the combination of that whole... those three things that we're looking at.

Ned Salter:

I have a question I'm going to try to do on the vaccine guys before we move on to some other topics is, given that it appears that the virus is mutating, how do you layer that into your analysis? Is that something people, investors, need to worry about? For example, if we came up with a vaccine today and then spent all this time and energy deploying it and distributing it around the world. Are we going to be late? How do you layer that into the work that the COVID working group is considering?

Judith Finegold:

I could probably take that one. So, Coronaviruses are very slowly mutating viruses and early on in this disease, we have been speaking to a virology expert. What's been super interesting, and just to give shout out to virologists around the world, so they've been pretty ninja. So since the beginning of this, virologists basically have no boundaries and they share, they rapidly sequence the virus the whole time and share it globally with different virology experts. Even before when all countries have been arguing, the virology global community has been sharing between themselves to make sure that they've been on top of all the viruses. And what they're seeing is actually very reassuring in terms of a very slow mutation rate. That means that they're fairly confident that targeting this part of the virus at the moment should be effective for the next one to two years. After that, we will have to change and that's what we do with flu vaccines in a yearly basis.

Ned Salter:

Great. Well, that's-

Amit Lodha:

Could I ask one more, the vaccine just... It's probably a controversial one but is President Trump's experience with COVID, should that give us some comfort that things will be better?

Judith Finegold:

That is controversial. I am a big believer in the use of therapeutic antibodies for all viral illnesses. So Trump was very fortunate because he, I think it's been widely broadcast, got one of the therapeutic antibodies in trials, on compassionate use, so he definitely was given a drug and not a placebo. There is a really good history of using these types of drugs for viral illnesses. If we can replicate his remarkable turnaround in trials, especially in hospitalised unwell patients, then yeah, I think that that would be a really big step forward. But let's see.

Ned Salter:

I'm sure we have some questions on the U.S. Presidential elections, so maybe we can come back to this topic. Mohit, tell me, we have a particular question on India and our forecast on how this disease and response progresses in India, but across Asia, can you bring to life a little bit about which countries are outperforming and which countries are underperforming in their response to the pandemic?

Mohit Mandhana:

I think, overall situation depends on few things. One is in terms of how fast the infection is, how many people have been infected, and then policy responses, and then in terms of healthcare infrastructure in specific countries. I think the clear laggard here are Indonesia and Philippines. Infections are doing high and there is some lack of healthcare infrastructure as well. In terms of number of ICU beds, in terms of doctors, etc. So those countries are clear laggards. Countries that have outperformed significantly are, I think, Thailand and Vietnam where there are hardly any deaths. And infection is pretty much under control. The way they've managed contact tracing, testing, everything. There are lot of small things which have to be executed well to stop the infection and they have done that.

Mohit Mandhana:

So, I would say Thailand, Vietnam, and to an extent, Korea, are the extreme. Someone like India is in between wherein they could not control the infection, but at the same time they made sure the mortality rate is low. The mortality rate has been just 1%, 2%. They've been good in terms of mobilising resources. Since you said specific question is on India, so India there's no first wave, second wave, third wave. They've tried to control the infection by lockdown for a month or so. They were unsuccessful and then they just opened everything in a very gradual manner. It's a very natural process of opening up, they've used. It's not that they've closed everything, the infection stopped, then they opened everything, infection started. It's a very normal curve for India.

Mohit Mandhana:

And now, what I'm seeing in India is that number of infections have actually peaked. So the peak was at 95, 000 daily new cases, and now we are somewhere around 70, 000 daily new cases. This is on an increased testing infrastructure. I would say India is somewhere in between where things were worse, now improving, mortality rate under good control.

Ned Salter:

Great, that's helpful. Amit, I'm going to come to you then. Obviously, where you're sitting right now, European countries are entering into another wave of increasing levels of infection. The response may not be as aggressive as possibly some of the other countries out here in Asia where we're seated today. How do you think that the European economies are going to cope with this higher rates of infection month on month, week on week? Are we well prepared to handle it and what does it mean for portfolio positioning?

Amit Lodha:

I think firstly Ned, you made the best trade of 2020. But to answer your question, when I look at U.K., I think U.K. is probably unique in Europe. It's very interesting when we've been doing these Zoom calls with companies in France, with companies in Germany, I did one with Poland the other day, they're all back in the office, and things seem to be progressively getting back to normal. They are using track and trace. I think that's very important to make sure that when they find something, they track it, trace it, and trace anyone who's come in touch with them. I think in the U.K. we've probably not done as good a job as we could have on that. We're still trying to get better overtime.

Amit Lodha:

I worry about the flu season in the next two or three months. I generally take a slightly longer term view. When I look back at what we went through in March and April, we didn't know anything about the virus then. We didn't have any of these modalities of how to address the virus. Most of the deaths, if you see, were very unfortunately in the old, care homes. Those are issues which we feared normally we'd have probably done a better job. Now we know those issues. So I hope that we've learned from that and our response will be better.

Amit Lodha:

I think the market is also thinking about it in the same way that we've all got to learn how to live with this. In some ways, we've got to keep the economies moving along. The governments are doing a great job in terms of the CARES Act or the Jobseekers Act or the Furlough Schemes over here. So they're trying to support the economies on an on-going basis and that... Obviously still questions down the line of all the debt and things like that, but as it stands now, I think we're trying to navigate it as best as we can. I don't feel too unhappy about the fact that, I think we're in a much better position today than we were in March and April.

Ned Salter:

I think the market, as you mentioned, being up significantly on the basis of a confluence of factors, not to be forgotten intense amount of physical and monetary policy action that we've seen around the world, does this stop-start activity imply that the market's pricing of the V-shape to recovery is overly aggressive? My 14 year old nephew, he's an active stock picker and he told me he thinks we're going to have a wiggle shaped recovery. What does this mean for markets, do you think?

Amit Lodha:

I think it's the classic... I think our colleague Roman's talked about a K-shape recovery where certain sectors do really well and certain sectors never come back. If I think about disruption, I would... You know that I used to be on top of the travel miles at Fidelity, in terms of meeting companies, going out to see investors, and I haven't done a trip since February because I think Zoom has significantly enhanced productivity. And if you ever spoke to an airline executive, they would have never said, an airport would have never said that Zoom is a threat to our business model, but it is.

Amit Lodha:

I think you and I will agree that corporate travel will now be much less than what it was before the pandemic because we've learned new things. I guess my point is that we are much more flexible and adaptable than we give ourselves credit for. I think we have adapted to this period. We have adapted to how this things will go, and things will never go back to how they were before, but there will be a new normal, and we have to learn to adapt, to invest, to work in that new normal.

Ned Salter:

I agree. Certainly, the 14 day quarantine makes travel significantly less appealing than it once was. I guess we have about two minutes left and there's a really interesting question, maybe on the future of healthcare that's come in. I guess, over to healthcare analyst in the first instance. Obviously, there's a handful of viruses and healthcare epidemics that take place each and every year, whether that's the seasonal flu. A lot of people have talked about how many people are infected by the seasonal flu and it doesn't get nearly as much airtime as Coronavirus or Dengue fever, which is primarily an emerging economy problem, not a developed economy problem. Has this... What is... I guess you could... Someone claimed... Someone said that it's a rich man's disease. Has this changed the nature of our awareness of this viral issues and do you think that they can have lasting impacts on the healthcare ecosystem?

Judith Finegold:

I think that it's maybe changing the awareness of governments of how much we're investing in infectious diseases, but I don't think the fundamentals have changed. The issue has been, for the last 10, 15, 20 years, we have completely under invested as a society in infectious diseases. I submitted some data recently. Pandemics, the very concept of this has been on the forefront of a lot of people's minds for a long time, then if you look at the amount of funding that there is for infectious diseases and compare that to things like oncology or cardiovascular disease, the Delta is absolutely huge. I don't think that any country is going to find this palatable in the future and I think there's going to be much more of an emphasis on making sure that we are investing in whole board spectrum of healthcare.

Judith Finegold:

I would say that there are things like antibiotics and antibiotic resistance. Unfortunately, these aren't good commercial markets so companies haven't been investing in them, but actually as a society, we really need to make sure that we stay at the forefront of those. I don't think that there's ever going to be this dearth of investment that has been up to this point. And we can even see it with evidence. So you could see some of the large multinationals have all given money to start up a company which is going to have a focus on infectious diseases. This company is never going to show the healthy investment thesis that other biopharma companies do. But for a society it's extremely important that we focus on this. So, I do think that it's going to be a key thing going forward.

Mohit Mandhana:

Can I just relate one point-

Amit Lodha:

Sorry, from a related to what Judith said... Sorry Mohit, you go.

Mohit Mandhana:

I mean, from my perspective, from the Asian perspective, I think I see just three changes on healthcare sector because of this pandemic. One is in terms of, of course, awareness levels. People especially in emerging markets will be more careful about what kind of water they drink, what kind of places they go to. There is a different level of awareness now. Second is, I see a trend of telemedicine picking up because now people are forced to talk to doctors using telemedicine and when I talked to hospital companies, it is more and more picking up. Some of it will stay even when the pandemic is gone. And lastly, I see some bit of diversification of value chain of these essential medicines because earlier, everything was dependent on China. Now, I see some companies who are customers of these medicines in U.S. and Europe, they won't diversify their value chains and some of the value chains are moving to countries outside of China as well.

Ned Salter:

Great, thank you guys. I think with that, we're going to unfortunately be carted off. But thank you to Amit and happy 10 year anniversary. Thank you, Judith. Thank you, Mohit, and we'll hand it back to you Andrew.

Andrew Dowling:

Thank you, Ned. And certainly, on behalf of all of us, we appreciate all your time this afternoon, and your insights as well. The COVID working group is one of a range of key insights that Amit draws upon as part of managing the Fidelity Global Equities Fund. I also take this opportunity to highlight the consistent excess performance of the strategy, not only over Amit's tenure, but also since inception 22 and a half years ago. We certainly appreciate the support from all of our clients with this strategy. Look, a sincere thanks once again for joining us today. We really do appreciate your participation and if you have any follow up questions, please contact your Fidelity account manager and as mentioned, CPD points will be available over the next 10 days. Until next time, enjoy your evening, and thanks once again.

This webinar is for professional investors.

This document is issued by FIL Responsible Entity (Australia) Limited ABN 33 148 059 009, AFSL No. 409340 (“Fidelity Australia”). Fidelity Australia is a member of the FIL Limited group of companies commonly known as Fidelity International.

This document is intended for use by advisers and wholesale investors. Retail investors should not rely on any information in this document without first seeking advice from their financial adviser. This document has been prepared without taking into account your objectives, financial situation or needs. You should consider these matters before acting on the information.  You should also consider the relevant Product Disclosure Statements (“PDS”) for any Fidelity Australia product mentioned in this document before making any decision about whether to acquire the product. The PDS can be obtained by contacting Fidelity Australia on 1800 119 270 or by downloading it from our website at This document may include general commentary on market activity, sector trends or other broad-based economic or political conditions that should not be taken as investment advice. Information stated herein about specific securities is subject to change. Any reference to specific securities should not be taken as a recommendation to buy, sell or hold these securities. While the information contained in this document has been prepared with reasonable care, no responsibility or liability is accepted for any errors or omissions or misstatements however caused. This document is intended as general information only. The document may not be reproduced or transmitted without prior written permission of Fidelity Australia. The issuer of Fidelity’s managed investment schemes is FIL Responsible Entity (Australia) Limited ABN 33 148 059 009. Reference to ($) are in Australian dollars unless stated otherwise.

© 2022 FIL Responsible Entity (Australia) Limited. Fidelity, Fidelity International and the Fidelity International logo and F symbol are trademarks of FIL Limited.

Share:
 

Ned is responsible for managing the Global Income PM team, the Sector PM team and leading the firm’s Thematic Investing initiatives. Most recently, Ned has taken on responsibility for global equity research, leveraging the strong leadership team running equity research globally. In addition, he manages the investment teams across Asia Pacific ex. Japan. Ned is a member of SIOC, the Sustainable Investing Operating Committee, and is an executive sponsor of the Fidelity ESG Rating Program.

Amit Lodha has been Portfolio Manager for the Fidelity Global Equities Fund for 10 years. 

Amit joined Fidelity as a research analyst in 2004, and was appointed Portfolio Manager of the FF Global Industrials Fund in April 2008. He took over the management of the Fidelity Global Equities Fund on 1st October 2010.

Prior to joining Fidelity in 2004, Amit spent three years as an equity analyst at Citigroup in Mumbai. He started his career in the industry at KPMG Mumbai in 1997 as a Senior Accountant.

Amit completed his BA and MA in Commerce & Economics at Mumbai University. He is a qualified accountant from the Institute of Chartered Accountants (India) and a CFA Charter holder.