Why Emerging Markets?

To build a dynamic investment portfolio fit for the future, investors need to align themselves with areas of compelling structural growth. We believe that there are compelling growth opportunities to be found in the world’s emerging markets, where we see a confluence of positive drivers, from several structural and cyclical growth trends to a robust policy environment and attractive valuations across much of the universe.

These developing economies are home to opportunities that cannot be found elsewhere. Emerging markets sit at the heart of powerful structural growth trends, from supplying the critical commodities needed for the energy transition, to benefiting from rising credit penetration and the emergence of companies moving up the global value chain. Emerging market companies are also on the cutting edge of global innovation. Increasingly, technological developments are every bit as exciting in China, Korea or Taiwan as in Silicon Valley, with much of the value accrual from AI likely to go to the supply chain based in emerging economies. The ability to tap into fast-growing, dynamic domestic markets, combined with strong growth potential within export markets, provides many emerging market companies with a long runway for growth.

While we would expect emerging markets to be more volatile, they also sidestep some of the risks of developed markets, such as high debt levels. Although aspects like geopolitical risk require much closer scrutiny, some other risks historically associated with emerging markets have eased – fiscal positions have strengthened, with many countries having better current-account balances and more significant foreign-exchange reserves, while improving governance means companies offer greater transparency than before.

Why Fidelity?

At Fidelity, we put ourselves in a prime position to find these exciting companies wherever they are in the world. We are embedded in these markets around the globe, meeting management teams and the competitors and suppliers of companies, and spending time on the ground understanding the domestic landscape in which these companies operate.

This allows us to find opportunities often overlooked by the wider market, particularly among smaller and medium-sized companies. These companies tend to be less well covered by analysts, leaving them under-researched and potentially mispriced, providing fertile ground for active fund managers.

Our global platform enables us to view every opportunity through a broader lens. Insights from analysts across sectors, industries and regions - spanning both emerging and developed markets - help deepen our understanding of emerging market companies and the forces shaping their prospects. By bringing together perspectives from our global mining and technology teams, for example, we can develop a more complete view of themes such as the supportive outlook for uranium and copper, and the structural growth driven by investment in electricity grids.

This breadth of research and connectivity across our global platform enhances our insight generation and helps differentiate our investment approach.

Why Fidelity Emerging Markets Limited?

Fidelity Emerging Markets Limited has a ‘go-anywhere’ approach, seeking out opportunities wherever they emerge across the developing world. The investment company seeks to invest in good quality businesses, benefitting from long-term structural and cyclical trends, and that can sustainably grow over long periods of time. We aim to invest in companies with dominant franchises, strong balance sheets and capable management teams that are well-positioned to take advantage of the abundant structural growth opportunities across developing markets.

While looking for those structurally growing companies, we will also find struggling companies where we believe the share price is likely to fall. We seek to capitalise on these opportunities by establishing short positions (investments designed to benefit if a company’s share price falls), allowing us to generate returns from both our positive and negative insights. This is combined with careful risk management, harnessing the emerging markets’ evolution and growth without experiencing every bump in the road.

Fidelity Emerging Market Limited looks to harness our comprehensive global analyst resource to find exciting opportunities wherever they are in the emerging world, seeking to ensure we maximise our ability to profit from businesses of all kinds: both the successful and failing, the large and the small, the disruptors and the disrupted.