Trustnet Magazine Issue 21 September 2016 - Page 18

IN FOCUS Fund FIDELITY EMERGING MARKETS The fund has underperformed in the rally this year, but tends to come into its own in falling markets 60% Fidelity - Emerging Markets (52.82%) MSCI Emerging Markets (29.58%) 50% IA Global Emerging Markets (26.57%) 40% 30% 20% 10% 0% Jul 16 Jan 16 Jul 15 Jan 15 Jul 14 Jan 14 Jul 13 Jan 13 Jul 12 Jan 12 -10% Jul 11 MANAGER: Nick Price FUND SIZE: £1.38bn LAUNCHED: 22/03/2010 OCF: 1.07% FE CROWN RATING: in the top quartile in its sector for suppressing annualised volatility, maximum drawdown (which measures the most money investors would have lost if they bought and sold the fund at the worst possible moments) and downside risk (which estimates its ability to lose value during falling markets). It also has a top quartile Sharpe ratio, a measure of riskadjusted returns. The research team at Square Mile, who awarded the fund an “A” rating, said: “Price aims to take risks, primarily at the stock level, in a measured manner and while the mandate empowers him with plenty of flexibility, we think he has a strong innate sense of risk.” “We see this fund as a solid choice for investors seeking a broad exposure to emerging market equities.” PERFORMANCE OF FUND VS SECTOR AND INDEX SINCE LAUNCH Jan 11 FILE and a comfortable outperformance of its sector average and the index over three, it has struggled to keep up with its peers over the last year as well as over three and six months, having fallen into the bottom quartile over both of these time frames. However, those who are familiar with the fund will know that it performs particularly well during falling markets, having achieved top-quartile annualised returns during the European debt crisis in 2011 and the “taper tantrum” in 2013. This capability for capital preservation could prove particularly useful with the Federal Reserve expressing renewed interest in raising rates. The fund’s defensive nature and the manager’s bottomup focus on quality stocks is reflected in its risk metrics. It is Jul 10 F OLLOWING MORE THAN THREE YEARS OF UNDERPERFORMANCE, the emerging markets sector finally bottomed out in February. However, aided by a number of dovish statements from the Federal Reserve and greater political uncertainty in the developed world, it has rebounded strongly since it hit this point. It has comfortably doubled the gains of the FTSE 100 since 12 February and has delivered a third more to investors than the S&P 500 and the Nikkei 225. Active managers often find it difficult to outperform their benchmark in fast-rising markets and this has proved to be the case here, with a number of consistent outperformers left in the shadows over the past few months. One of these is FE Alpha Manager Nick Price’s Fidelity Emerging Markets fund, which has five FE Crowns and is £1.4bn in size. The fund has made 52.82 per cent since launch in March 2010, around double the gains of its IA Emerging Markets sector and MSCI Emerging Markets index. While the fund also boasts a topquartile total return over five years Source: FE Analytics 16