Nick Price, portfolio manager of the Fidelity EMEA fund, explains the benefits of investing in this "misunderstood" investment market.
Why should investors consider an EMEA fund over a general emerging markets fund?
It still remains one of the most underappreciated and misunderstood markets in the developing world today. Indeed, one of the key attractions of the Europe, Middle East and Africa (EMEA) is its large size and inherent diversity.
The emerging economies of the EMEA region are blessed with a huge variety of investment opportunities, many of which are structural in nature.
Whether it is the energy, metal and raw material deposits buried across the continents and off their coastlines, the abundance of untapped agricultural land yet to be fully utilised, or the early stage consumer markets of Sub-Saharan Africa where underleveraged, early-stage consumers offer material growth for many years to come, this region has a great deal to offer a world that continues to consume more and look for new untapped markets.
“ Its inherent diversity is one attraction of this market ”
For us, the EMEA fund represents the goldilocks scenario in so far that it can have just the right amount of exposure to companies that can truly benefit from some long term, underappreciated themes, as currently is the case with the growth of the consumer in Africa.
Indeed, it is in Africa where we see significant long term potential and with a global emerging markets fund – you frankly just do not get enough exposure in the region to truly benefit.
Conversely though, we all saw what happened during the credit crisis when a couple of frontier African markets closed for business due to the inability of some African exchange desks to convert their currencies into dollars, which just highlights some of the liquidity risks.
What has been the main driver of outperformance over the five-year lifespan of the fund?
The bulk of the fund’s outperformance has come from the fund’s bottom-up stock picking process.
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