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Fidelity looks to EMEA

Fidelity International has introduced a Luxemburg-based fund investing in emerging Europe, the Middle East and Africa.

The fund will comprise a concentrated portfolio of 50-70 stocks across more than 13 countries. These will be selected from a universe of 2,000 stocks.

Fidelity says the EMEA region is rich in natural resources, with more than 80 per cent of the world’s oil reserves and over 90 per cent of the world’s platinum and chromium reserves coming from EMEA countries. China and India are driving a long-term trend for oil and commodities and as producers, EMEA countries are set to profit from this. The region is also likely to benefit from the cheap goods produced in China and India to make their own economies more efficient.

The fund’s portfolio manager Nick Price has spent the last nine years at Fidelity and has managed internal EMEA assets since 2005. He joined the company as an analyst before becoming assistant portfolio manager on the FF European Growth Fund in September 2004.

The new fund will be benchmarked against the MSCI Emerging EMEA Index, but Price will not be constrained by it. Price is a bottom-up stockpicker who takes a value based approach by identifying companies that are unappreciated by the market. He will be supported by five EMEA analysts, each cover an industry sector. He will also make 10-15 company visits a week throughout the region.

Price will focus on businesses on low valuations relative to their earnings that high free cash-flow yield, high dividend yield and a high return on equity. Stcoks will be held on the basis of a long-term view and it will not be unusual for the fund to hold stocks for longer than two years.

EMEA is a term often used in the US business world but Fidelity appears to be using the term as a follow-up to Bric funds. It looking at the next stage of development by focusing on the regions that are benefiting from Chinese and Indian demand an from the products that are coming out of India and China once this demand is met.

However, Bric funds have been criticised for grouping together four different countries as a marketing gimmick and the same could be said of the EMEA fund as Europe, Africa and the Middle East are very different markets.


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