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Fidelity launches emerging market debt fund

Fidelity has launched an emerging market local currency debt fund.

The Fidelity Funds Emerging Market Local Currency Debt fund is a Luxembourg-domiciled Sicav and will be managed by Steve Ellis in London, with co-manager Eric Wong based in Hong Kong.

Ellis currently manages over $1bn in emerging market assets, while Wong joined Fidelity from BlackRock last year.

The aim of the fund is to invest in local currency emerging market bonds issued predominately by sovereigns such as Russia, Mexico, South Africa, Turkey, Brazil, Poland, Indonesia and Thailand.

Minimum investment for the fund is $2,500, or $50 per month, for the A share class, with an annual management charge of 1.2 per cent. The Y share class has a $1m minimum, with an annual management charge of 0.6 per cent.

The launch brings the EMD range to four funds, including the Fidelity Funds Emerging Market Corporate Debt fund, launched last month, $1.2bn (£781m) Fidelity Funds Emerging Market Debt fund and €116m (£98m) Fidelity Funds Emerging Market Inflation-Linked Bond fund.

Ellis says: “The super secular growth story of emerging markets has a long way to go. The continued development of local EM markets has taken hold. This dynamic will look to persist for the foreseeable future.”

Hargreaves Lansdown senior investment analyst Adrian Lowcock says emerging market debt is not currently offering good returns for the risks.

Lowcock says: “If you are going to buy emerging market debt why not buy equity? You can get a good yield on some of the emerging market equity income funds and you have potential for capital growth with the same currency exposure.”

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