Manager Research

We have completed our latest review of the Fidelity Funds – Emerging Markets Fund and maintained our Tier 2 rating. Tier 2 is a positive rating, with some minor concerns we are monitoring. This is the first review of the fund by our South African manager research team, which has taken over coverage from our UK colleagues.

Team and Process

Our assessment supports the view that this is a strong, investable emerging markets fund. It is run by an experienced team, although there was some turnover in 2024. The team consistently invests in high-quality companies with strong earnings growth, an approach that is evident in the track record. It is backed by Fidelity's large and well-resourced research platform.

Performance

Performance has improved meaningfully. The fund is well ahead of the market over one and three years, helped by its holdings in gold, artificial intelligence and semiconductor companies. The team has gained its technology exposure through a broad range of companies rather than relying only on the largest names, such as TSMC, Samsung and SK Hynix.

However, it remains behind the market over five years, largely because of a difficult period between 2021 and 2023. During this time, the fund held more in China and Russia than the market did, just as both fell sharply following regulatory and geopolitical events. The team has since responded by giving more weight to political and economic risks when deciding how much to invest in a company.

Succession

Our main concern is succession. Nick Price has led the fund since 2009, and we see co-portfolio manager Chris Tennant as his most likely successor. Chris impressed us in our meetings, but he has only been a decision-maker on this fund since 2024. We have not seen evidence of positive decision-making across a longer market cycle and the broader emerging markets opportunity set.