Fidelity Global Emerging Markets aims to achieve returns in excess of the MSCI Emerging Markets Index over the suggested minimum investment time period of seven years plus.
During the quarter, the Fund delivered 5.9% while the MSCI Emerging Markets Index delivered 4.0%. At the sector and country level, stock picking added value. Here, financials and consumer staples were among the top contributors to returns. From a country perspective, Hong Kong and Taiwan added value. Security selection in Hong Kong and China aided relative returns Selected Chinese stocks featured among the top contributors to returns as the market regained lost ground. Zhongsheng Group, Shenzhou International and Yifeng Pharmacy enhanced gains. Likewise, Hong Kong-based life insurance company AIA Group, which operates in the Chinese market, advanced on expectations of a recovery in Chinese demand.
In addition, it reported an in-line third quarter despite a challenging macroeconomic backdrop. Tencent was a notable detractor An underweight exposure to Tencent hurt relative returns. The company reported 2% year-on-year growth in adjusted profits in its latest quarterly results, after four consecutive quarters of decline. Furthermore, the stock rallied as authorities granted licences to over 100 new games. Losses were partially offset by our position in South Africa’s Naspers, which holds a key stake in Tencent.
What is Fidelity Global Emerging Markets Fidelity Global Emerging Markets is an Managed Funds investment product that is benchmarked against World Emerging Markets Index and sits inside the Foreign Equity - Emerging Markets Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Fidelity Global Emerging Markets has Assets Under Management of 496.53 M with a management fee of 1%, a performance fee of 0.00% and a buy/sell spread fee of 0.49%.
How has the investment product performed recently? The recent investment performance of the investment product shows that the Fidelity Global Emerging Markets has returned 1.45% in the last month. The previous three years have returned -1.31% annualised and 11.16% each year since inception, which is when the Fidelity Global Emerging Markets first started.
How is risk measured in this investment product? There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Fidelity Global Emerging Markets first started, the Sharpe ratio is 0.61 with an annualised volatility of 11.16%. The maximum drawdown of the investment product in the last 12 months is -9.78% and -27.18% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product? Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Fidelity Global Emerging Markets has a 12-month excess return when compared to the Foreign Equity - Emerging Markets Index of -5.92% and 2.19% since inception.
Does the investment product produce Alpha over its Peers? Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Fidelity Global Emerging Markets has produced Alpha over the Foreign Equity - Emerging Markets Index of -0.54% in the last 12 months and 0.19% since inception.
What are similar investment products? For a full list of investment products in the Foreign Equity - Emerging Markets Index category, you can click here for the Peer Investment Report.
What level of diversification will Fidelity Global Emerging Markets provide? Fidelity Global Emerging Markets has a correlation coefficient of 0.93 and a beta of 1.06 when compared to the Foreign Equity - Emerging Markets Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
How do I compare the investment product with its peers? For a full quantitative report on Fidelity Global Emerging Markets and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Fidelity Global Emerging Markets with the World Emerging Markets Index? For a full quantitative report on Fidelity Global Emerging Markets compared to the World Emerging Markets Index, you can click here.
Can I sort and compare the Fidelity Global Emerging Markets to do my own analysis? To sort and compare the Fidelity Global Emerging Markets financial metrics, please refer to the table above.
Has the Fidelity Global Emerging Markets been independently verified by SMSF Mate? This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
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Performance Commentary - September 30, 2022 Selected exposure to materials We are underweight in the materials sector. The only commodity we own a stake in is copper, underpinned by our view that the metal is supply constraint and benefits from the move towards a greener energy and electric vehicles.
Our exposure is through First Quantum Minerals, a Canadian listed group with copper assets located across emerging markets, and Peru’s Southern Copper. Other than that, the Fund also continues to hold a position in Chinese waterproofing company Beijing Oriental Yuhong, which is also classified under materials. Biased towards financials AIA Group remains one of the high-conviction positions in the portfolio. It is the largest independent life insurance player in PanAsia, operating across HK, mainland China, Thailand, Singapore, Malaysia, etc. It has an excellent track record of execution, resulting in a strong balance sheet and disciplined capital allocation. Elsewhere, Indian lender HDFC Bank is favoured for its strong franchise, pristine asset quality, good management team and solid asset quality. Key trades We moved capital from Tencent to Naspers amid growth challenges on slowing game approvals in an uncertain macroeconomic environment.
Elsewhere, we sold the position in India-based service provider Tata Consultancy Services amid lower demand and expensive valuation. Within industrials, electrical light manufacturer Havells and power tools company Techtronic Industries were amongst the key contributors to returns. The latter reported encouraging results, posting robust growth from its Milwaukee, do-it-yourself (DIY) and Ryobi brands. The company continues to benefit from moving up the value chain and gaining market share with its battery-operated cordless power tool products.
Performance Commentary - June 30, 2022 The Fund delivered -4.0% in AUD terms during the quarter, while the MSCI Emerging Markets Index NR was down by 3.3%. At a sector level, stock picking in financials and the positioning stance in consumer discretionary contributed to performance. However, supply chain issues and fears over deteriorating consumer demand weighed on the information technology sector. At the country level, stock picking in China contributed to relative returns. Security selection in China enhanced gains A rotation to growth was evident with strong performance apparent amongst autos and de-carbonization supply chain companies such as Zheijiang Sanhua and Zhongsheng Group.
Elsewhere, the holding in sportswear brand Li Ning gained on expectations of a recovery in consumption as Covid restrictions ease. AIA Group was amongst key contributors The insurer benefited from an improving sales outlook as Covid cases wane in China. The company is likely to see an increase in agent sales headcount, improved productivity in the distribution channel, and continued demand for protection coverage. Additionally, AIA received approval to begin preparation for a branch in Henan province which is expected to keep the insurer on track to reach 70% of the mainland China market by end-2024.
Performance Commentary - September 30, 2021 Whilst parts of our investment universe are seeing in improvement in the COVID pandemic, the possibility of subsequent waves remain a concern. As a result, volatility is likely to persist for some time, even as markets have increasingly been focussing on economic recovery, and are more likely to look through near term concerns. The synchronised monetary and fiscal support globally has boosted money supply, which is getting channelled into consumption and capital markets. Whilst we need to be mindful of valuation excesses in certain segments, the current environment is conducive for a wider financial penetration and growth in EM. China Evergrande has amassed huge debt, with many other Chinese property developers in a similar position with a possibility of contagion, but we do not see it as a systemic risk. Although one cannot be certain, it is extremely likely that the Chinese government will step in to provide stability to the sector, if such as step is required,we will see significantly less residential construction, which will have a bearing on Chinese GDP.
Performance Commentary - June 30, 2021 Key detractors South Africa’s internet conglomerate Naspers came under some pressure during the quarter. The stock was negatively impacted by overhanging regulatory concerns, which weighed on its key stake in China’s Tencent. Within industrials, truck engine manufacturer Weichai Power was the detractor from returns. While it can continue to grow market share over the medium term, it is exposed to a slowdown in the near term. Materials delivered mixed performance Copper miner First Quantum Minerals and painting business SKSHU were among the key contributors to returns. However, the limited exposure to Brazilian iron ore miner Vale held back gains as iron ore prices soared. Consumer discretionary stock aided returns Many Chinese consumer holdings, including Li Ning (sportswear), Shenzhou International (clothing) and Zhongsheng Group (automobiles) added value. Shares in Li Ning rallied after it issued a positive profit alert towards the end of the quarter.
However, some of these gains were partially offset by internet business VIP Shop, which traded lower alongside the broader industry on the back of the government’s focus on anti-trust matters. Midea Group (white goods) also weighed on returns.
Performance Commentary - December 31, 2020 Consumer discretionary holdings contributed strongly
Chinese consumer discretionary holdings, including Li Ning (sportswear), Midea Group (white goods) and VIP Shop (e-commerce), supported returns. The structural underweight stance in Alibaba also proved beneficial, as investors grew concerned about anti-trust regulation. These gains were partially offset by the lack of exposure to internet platform Pinduoduo and electric vehicle manufacturer NIO. Both stocks rallied on the back of strong results and retail flows. However, we are not inclined to chase these names at current valuations.
Financials names added value
Financials re-rated, reflecting improving prospects over the re-opening of the global economy. Consequently, holdings in Indiabased Housing Development Finance and HDFC Bank supported performance, as did the position in Indonesia-based Bank Central Asia.
Industrials detracted
Industrials weighed on returns, reflecting the weaker performance of Weichai Power (truck engines) and Techtronic Industries (power tools). The latter performed consistently over the course of the year as the do-it-yourself trend supported demand for its products. However, it failed to keep pace as the market rotated towards ‘recovery’ plays.
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