Fidelity Investments[R] Offers Investors Access to Growing Emerging Markets Investment Opportunities Through Two New Funds.
BOSTON -- Fidelity Investments([R]), a leading global asset management firm and one of the largest managers of emerging markets securities, today announced that it has expanded its emerging markets fund offering with the launch of Fidelity Total Emerging Markets Fund (FTEMX) and Fidelity Emerging Markets Discovery Fund (FEDDX). The new funds are available directly to investors, as well as through financial advisors.
Fidelity also published two new papers focused on emerging markets investing: "The Case for Balanced Investing in Emerging Markets" and "Structural Growth Opportunities in Emerging-Market Small-Cap Stocks." These papers analyze the development and maturation of emerging markets, as well as the long-term investment opportunities.
Fidelity Total Emerging Markets Fund, which is lead managed by 16-year Fidelity veteran John H. Carlson, offers investors exposure to both emerging markets equities and emerging market debt through a single investment. Fidelity Emerging Markets Discovery Fund, managed by Ashish Swarup, provides investors access to small- and mid-sized emerging market companies.
Carlson and Swarup will work closely with portfolio managers and research analysts who are located in markets around the world to help uncover potentially attractive emerging market equity and bond investment opportunities. Fidelity currently manages more than $21 billion1 in emerging market assets through eight funds.
"We appear to be at a unique point in time when emerging economies are poised to reach levels of wealth that may continue to spur consumption, innovation, and industry formalization within populations that are, in some cases, several times larger than developed countries," said Brian B. Hogan, president of Fidelity's Equity Group. "As investment opportunities continue to grow in emerging markets, these new funds offer investors and their advisors an opportunity to participate in these markets, while diversifying the international component of their portfolios."
Examining the Emerging-Market Investment Opportunity
The accompanying chart shows the population and economic expansion of emerging markets has surged over the past several decades and is likely to continue to do so.
Developing countries with large populations, like China, India, Indonesia and Brazil, are moving through the rapid economic development phase. Together, these four countries account for nearly 3 billion people and approximately 43 percent of the global population.2 While rapid economic development in such large populations can present tremendous investment opportunities, it also can create challenges, for example, some economic activity may not yet be in "formal" industries nor produced by public companies.
Fidelity Total Emerging Markets Fund
Fidelity Total Emerging Markets Fund seeks income and capital growth by investing in both equity and debt securities of emerging markets issuers. Fidelity will normally invest approximately 60 percent of the fund's assets in equity securities and 40 percent in bonds. Fidelity may vary from this target if it believes stocks or bonds offer more favorable opportunities, but will always invest at least 20 percent of the fund's assets in bonds and other debt securities. Portfolio Manager Carlson actively manages the allocation of fund assets across equity and debt sub-portfolios.
Fidelity's Emerging Markets Sector Equity team (Douglas Chow, Timothy Gannon, Jim Hayes, Per Johansson and Sam Polyak) manage the equity sub-portfolio, and Carlson manages the debt sub-portfolio. The fund will compare its performance to a composite benchmark comprised of 60 percent emerging market equity and 40 percent emerging market bond weightings. The fund also will compare its performance to the MSCI Emerging Markets Index.
"Despite the growth and advancement in emerging-market investing over the past decade, one thing has not changed -- emerging-market investing is still commonly thought of as either 'equity only' or 'debt only,'" said Carlson. "However, our research suggests a balanced approach to emerging market investing could offer diversification benefits, as the equity portion can provide the potential for capital appreciation, while the fixed-income portion may offer relative stability through the potential for income generation and lower overall return volatility."
In addition to this new fund, Carlson manages Fidelity New Markets Income Fund, Fidelity Advisor Emerging Markets Income Fund and Fidelity Global High Income Fund. Carlson joined Fidelity in 1995 as a portfolio manager responsible for Fidelity New Markets Income, Fidelity Advisor Emerging Markets Income and Fidelity Advisor Strategic Income funds. He was lead manager for Fidelity Strategic Income and Fidelity International Bond funds from 1998 to 2001, and for Fidelity Advisor Strategic Income Fund until 2001. He managed Fidelity Emerging Markets Fund from 2001 until 2003.
Prior to joining Fidelity, Carlson spent three years with Lehman Brothers, leaving the company as executive director of emerging markets at Lehman Brothers International in London. From 1990 to 1992, he was executive vice president of capital markets for Daiwa Securities America. Before that, he was president and chief executive officer of Security Pacific Securities for Security Pacific Merchant Bank for three years. From 1983 to 1987, Carlson was vice president and manager of hedging and arbitrage for Merrill Lynch Capital Markets.
Fidelity Emerging Markets Discovery Fund
Fidelity Emerging Markets Discovery Fund seeks capital appreciation by investing in equity securities of emerging markets issuers. Fidelity expects the fund to be more exposed to stocks that serve the local emerging market consumer and accordingly, expects the weights to traditional "consumer sectors," such as consumer staples, consumer discretionary and health care, to be higher than it is for traditional large cap emerging markets funds. The fund will compare its performance to the MSCI Emerging Markets Small and Mid Cap Index, which is designed to measure the performance of small and medium sized companies in emerging market countries.
"Through investment in smaller-cap, emerging-market companies today, investors potentially can access a compelling growth opportunity at a distinct point in time when emerging market economies are undergoing positive structural change and already large populations are growing rapidly," said Swarup.
In addition to this new fund, Swarup manages the emerging markets assets within Fidelity Diversified International Fund. Previously with Fidelity, Ashish served as an assistant portfolio manager on Global Emerging Markets for Fidelity Worldwide Investment (FWI)3, formerly Fidelity International. He joined Fidelity in 2004 as a research analyst within FWI, responsible for covering consumer and diversified stocks in Eastern Europe, Russia, the Middle East and Africa.
"Actively managing emerging markets investments requires a substantial research commitment, and Fidelity has significant global research capabilities with investment professionals on the ground in the U.S. and overseas," said Hogan. "We have been following emerging markets very closely for 20 years, and believe they continue to offer one of the most potentially attractive long-term risk/reward profiles."
Fidelity Publishes Two New Emerging Markets White Papers
Fidelity recently published two new papers focused on emerging markets investing: "The Case for Balanced Investing in Emerging Markets" and "Structural Growth Opportunities in Emerging-Market Small-Cap Stocks."
* "The Case for Balanced Investing in Emerging Markets" - This paper explores the development and maturation of emerging-market equity and debt during the past 15 years, and provides an argument for why long-term investors may want to consider maintaining a balanced approach.
* "Structural Growth Opportunities in Emerging-Market Small-Cap Stocks" - This paper examines the emerging-market investment opportunity, looking at the drivers of developing country economic growth. It also analyzes why small capitalization emerging market companies may offer compelling growth opportunities.
Investors can learn more about the new funds by visiting Fidelity.com. Financial advisors can get more information about the funds by visiting Fidelity Financial Advisor Solutions' client web site (advisor.fidelity.com) or calling 800-544-9999.
About Fidelity Investments
Fidelity Investments is one of the world's largest providers of financial services, with assets under administration of $3.2 trillion, including managed assets of more than $1.4 trillion, as of September 30, 2011. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.
Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.
Past performance is no guarantee of future results.
Diversification does not ensure a profit or guarantee against loss.
The securities of smaller, less well-known companies can be more volatile than those of larger companies.
Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments, all of which are magnified in emerging markets.
The MSCI Emerging Markets is a market capitalization-weighted index that is designed to measure the investable equity market performance for global investors of emerging markets.
The MSCI Emerging Markets SMID (Small, Mid) Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. This Index consists of Emerging Markets securities that fall in both Small and Mid-Cap size segments as defined by MSCI's Global Investable Market Indices Methodology. The MSCI Emerging Markets SMID Index consists of the following 21 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.
Fidelity Brokerage Services LLC, Member NYSE, SIPC 900 Salem Street, Smithfield, RI 02917
Fidelity Investments Institutional Services Company, Inc., 100 Salem St., Smithfield, RI 02917
[c] 2011 FMR LLC. All rights reserved.
1 As of September 30, 2011.
2 Source: CIA World Factbook, July 2011.
3 Founded in 1969, FWI has been operating independently from U.S.-based Fidelity Investments since 1980.
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|Date:||Nov 9, 2011|
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