Recently enacted federal legislation has sparked a wave of wide-ranging investments in the U.S. economy, according to Fidelity Portfolio Manager Jason Weiner, who expects the primary beneficiaries to be manufacturing-focused businesses serving clean energy, electricity, automation, semiconductor and electric vehicle end markets, among others.
“In an environment where deglobalization is on the rise, industries critical to national security are reshoring, and solar panels and electric vehicles must meet domestic content requirements to qualify for tax credits, I see a promising runway for growth among industrial firms, as well as certain semiconductor-related businesses,” says Weiner, who co-manages Fidelity® Growth Discovery Fund (FDSVX) with Asher Anolic.
The Inflation Reduction Act, enacted in August 2022, provides funding for programs in clean energy, climate mitigation and resilience, agriculture and conservation-related investment programs, Weiner points out.
The CHIPS and Science Act, passed into law at the same time, aims to catalyze investments in domestic semiconductor manufacturing capacity, he explains, noting that CHIPS is an acronym for Creating Helpful Incentives to Produce Semiconductors.
In managing the fund, Weiner and Anolic have a keen eye for companies they believe can grow earnings faster than the market, typically industry leaders with a proven track record.
With government stimulus now providing a tailwind for stocks in the industrials sector – a segment of the market Weiner says is noted for limited investment since the global financial crisis of 2008 – he sees manufacturing and engineering companies such as KBR (KBR), Ingersoll Rand (IR) and Westinghouse Air Brake Technologies (WAB) as well-positioned to benefit from the legislative boost.
These stocks are part of the fund’s roughly 13% allocation to industrials as of May 31, the top sector overweight by a wide margin.
Included in the mix is equipment manufacturer Eaton (ETN), which Weiner believes could continue to experience considerable demand for its equipment, due to the growing trend of electrification, which will require upgrades to existing power grids across the U.S. and globally.
He’s also bullish on electric vehicles, as represented by a stake in BYD (BYDDF), the leading EV maker in China. The firm makes both low- and high-end models, with a large degree of integration in its automobiles, according to Weiner.
In the EV value chain, the fund has held a large position in chipmaker Nvidia (NVDA) – which in March, announced a partnership with BYD – as well as smaller investments in NXP Semiconductors (NXPI) and Allegro Microsystems (ALGM).
The real appeal of Nvidia, Weiner says, is its dominance of the market for advanced graphics chips that are the lifeblood of new generative AI systems and the data centers they require.
“These stocks represent a unique opportunity to invest in the future of our economy,” he concludes. “Looking ahead, we plan to remain focused on areas of the market driven by salient secular trends that we think can lead to long-term growth.”
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Jason Weiner is a portfolio manager in the Equity division at Fidelity Investments.
In this role, Mr. Weiner is portfolio co-manager of Fidelity Capital Appreciation Fund, Fidelity Advisor Equity Growth Fund, Fidelity VIP Growth Portfolio, Fidelity Growth Discovery Fund, Fidelity Advisor World Funds Equity Growth Fund, Fidelity Advisor Series Equity Growth Fund, and VIP Dynamic Capital Appreciation Portfolio.
Prior to assuming his current responsibilities, Mr. Weiner managed various other Fidelity funds, including Fidelity Independence Fund, Fidelity Fifty Fund, and Fidelity Advisor Fifty Fund. Additionally, Mr. Weiner managed Fidelity OTC Portfolio, Fidelity Growth Discovery Fund, Fidelity Export and Multinational Fund, Select Computers Portfolio, and Select Air Transportation Portfolio. He has been in the financial industry since joining Fidelity as an equity analyst in 1991.
Mr. Weiner earned his bachelor of arts degree in political science from Swarthmore College.