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Japan still holds out promise for Fidelity

Manager of the Fidelity balanced multi-manager fund is looking at Japan and emerging Europe to achieve diversification across the equity part of the portfolio.

Steve Gibson says the fund is currently underweight Japan due to negative economic data in the aftermath of the tsunami.

He says Japan has suffered as a result of the demographic problems of an ageing population and falling birth rates. Its economy is shrinking and has been hit by a strong yen when trying to compete against neighbouring regions that provide exports more cheaply.

But Gibson believes there will still be opportunities. He expects to overweight Japan later in the year when it rebuilds and supply constraints ease, leaving it in a better state to catch up.

He is also looking to emerging Europe and has added Jupiter emerging European opportunities to his emerging markets exposure. This fund aims for growth by investing in mainly Central and Eastern Europe. It is run by Elena Shaftan and Ingrid Kukuljan on a best ideas basis, containing 30-35 stocks.

Gibson says: “That sub-region is cheap and lagging other emerging market sub-regions. The Jupiter fund’s exposure to Russia is quite high and is a good hedge against the oil price stunting growth by moving ahead too quickly.”

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