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Fidelity’s split success

Jorma Korhonen, manager of Fidelity’s £2.8bn global special situations fund, has sounded a warning about emerging markets, saying his holdings in emerging sectors stand at only at 5 per cent.

He said the perception of the risk attached to emerging markets was at a low but he had seen some China stocks increase by 60 per cent not because of changes in fundamentals but because of liquidity growth.

Korhonen has recently declared himself satisfied with the split from Anthony Bolton’s UK special situations fund.

In London last week, Korhonen said: “The transition is fully done. The fund is 100 per cent where I want it to be and it went better than I thought.”

Noting that he kept telling people they would be surprised how much would be invested in the UK, he said the fund holds around a third in the UK although did not necessarily mean the underlying businesses were in the UK with a quarter in the US. He sounded a bearish note, saying he expected single-figure returns if the economic climate does not worsen.

He said: “It feels as if there is not a big upside. Companies are very well run, better than the last cycle or the cycle before that. If things get worse, the downside is substantial because companies are better run and it is more difficult to cut costs.”

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