Fidelity Emerging Markets offers unique opportunities for investors

Fidelity Emerging Markets Limited (LON:FEML) is increasingly recognised as a top choice for investors seeking exposure to emerging markets. Managed by experienced professionals Nick Price and Chris Tennant, the trust benefits from their in-depth knowledge of this dynamic sector. FEML’s flexible investment strategy, which allows for both long and short positions, sets it apart in the market, enabling it to adapt to a wide range of opportunities.

Over the past year, FEML has delivered a notable NAV total return of 22.1%, outperforming the MSCI Emerging Markets Index, which returned 14.7%. This strong performance can be attributed to the managers’ astute stock selection, particularly in their short positions. Successful bets against an Asian utility company and an Asian battery maker highlighted the effectiveness of FEML’s active management approach. On the long side, investments in companies such as Kaspi, MakeMyTrip.com, and TSMC have also contributed significantly to the trust’s performance, leveraging growth in e-commerce, travel recovery, and semiconductor demand.

A key advantage of FEML is its ability to strategically position itself in emerging markets, taking advantage of long-term trends like friendshoring and nearshoring. Investments in companies like Grupo Aeroportuario del Pacífico in Mexico and FPT in Vietnam are well-aligned with these shifts. Additionally, the trust’s approach to the Chinese market, including adding positions like Anta Sports and using options, reflects its innovative and adaptable investment strategy.

Analyst Josef Licsauer from Kepler Partners highlights FEML’s differentiated approach as a significant strength, particularly its capacity to generate alpha through short positions in challenging economic conditions. This, combined with the board’s proactive measures like a buyback programme and tender offer, has helped narrow the trust’s discount, making it an attractive option for investors. Currently trading at an 11.8% discount, which aligns with its five-year average, FEML remains a compelling choice for those looking to invest in emerging markets.

Fidelity Emerging Markets Limited offers a robust investment opportunity for those looking to tap into the potential of emerging markets. With a skilled management team, a versatile investment strategy, and strong recent performance, FEML is well-equipped to navigate the complexities of global markets and deliver long-term value to its investors. As emerging markets continue to develop, FEML’s unique approach and strategic positioning make it a standout option.

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