Edison issues review on Fidelity Emerging Markets
London, UK, 11 August 2022
Edison issues review on Fidelity Emerging Markets (FEML)
Fidelity Emerging Markets (FEML) was transferred to Fidelity in October 2021. FEML mirrors the FAST EM Fund (FAST, £178m AUM at 30 June 2022), which has achieved a strong track record over the past 10 years, outperforming the MSCI Emerging Markets Index (MSCI EM Index) under lead fund manager Nick Price. Russia's invasion of Ukraine in February 2022, concerns about inflation and the outlook for global growth have shaken riskier assets and the MSCI EM Index is down 8.1% year to date (in GBP to end July). While FEML was not immune to the setback, Fidelity's comprehensive team of 45 analysts, together with manager Nick Price and co-portfolio manager Chris Tennant, can react to market shocks efficiently, while identifying and investing in the widest range of attractively valued, high-quality EM growth opportunities.
The unprecedented event of Russia, a meaningful emerging market, becoming uninvestible has had a negative impact on FEML's recent performance relative to peers, but the managers acted swiftly to deal with the issue. In 2021 FEML had a conviction overweight position in selective Russian stocks (c 18% country weight). Given rising geopolitical tensions in late 2021, the team took steps to reduce exposure to Russia by employing a country hedge. The aggregate Russia weight of the fund was 0.06% (net exposure at 31 March 2022). These efforts are ongoing and FEML will not invest in Russia in the foreseeable future. The advantages of FEML's closed-ended structure are starting to emerge, as highlighted by its recent outperformance relative to the open-ended FAST.
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