With economies in a growth phase since 2009, markets have been generally trending upwards, with a few blips here and there. Yet Patrice Quirion, a portfolio manager at Toronto-based Fidelity Investments, cautions that there are signs that economies are in the late stages and it's time to de-risk, or minimize riskier exposures, in global portfolios.
The first concern revolves around inflation, which has been slowly surfacing, especially in strong economies such as the United States. "What characterizes the late cycle is that you slowly start to run out of excess capacity -- be it labour, manufacturing or commodity capacity. And as demand continues to grow, it puts pressure on prices," says Quirion, who oversees about $2 billion in assets, including the 4-star rated $590.9-million Fidelity Global Concentrated Equity.
Quirion notes that he meets between 600 and 800 companies a year, and over the past year he's heard an increasing number of corporations raising the point that labour inflation is becoming more of a factor. "Just look at the U.S., where unemployment is around 3.8%. There is not a lot of slack," says Quirion.
