Can megatrends like 5G continue to grow?

Jean Park believes companies driving megatrends could still grow longer term.

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"I'm looking closely at companies helping to drive megatrends, because I still believe many could continue to grow and produce free cash flow longer term, even if the economy continues to slow this year," says Jean Park, portfolio manager of Fidelity® Growth Strategies Fund.

Park says she understands how unsettling it is for investors to see the stock market decline, and to also see economic activity in their communities contract as a result of the coronavirus pandemic. Yet she believes potentially powerful longer-term trends are likely to continue this year, and it's where she's maintained exposure even amid the selloff.

One of the next-generation technologies Park thinks qualifies as a megatrend is fifth-generation wireless networks, also known as 5G. She notes that 5G networks are expected to be much more efficient and 10 to 40 times faster than 4G networks.

Increased bandwidth speeds due to 5G, she says, could help drive not only next-generation video games, but also medical advances and burgeoning trends such as self-driving vehicles.

For much of 2019 and early 2020, the fund has had exposure to companies that own cell phone towers, as well as semiconductor companies she thinks could be prominent players in the rollout of 5G technology.

Similarly, Park has maintained outsized exposure to several software & services companies she believes stand to benefit from megatrends related to global payments.

"It's difficult to know when the coronavirus pandemic will end, but I've kept the fund's exposure to megatrends I believe are likely to play out for many years," she says.

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