![]() ![]() The structural case for investing in developing economies remains extremely strong: attractive demographics, a burgeoning middle class providing new markets for goods and services, and economies that can grow more rapidly than those in the West. While the Western world struggles with the challenges of over a decade of ultra-loose monetary policy and the fallout from Covid stimulus packages, leading to the highest levels of inflation and interest rates in nearly a generation, in most emerging markets the picture is completely different. On a historical basis, emerging markets themselves offer attractive relative valuations as well as compelling fundamentals. In our view this represents competitive value for a truly actively managed emerging markets portfolio with an extended set of tools with which to generate returns. ![]() We believe a key attraction for fee-conscious investors is our cost efficiency, underpinned by our competitive ongoing charges ratio, which is one of the lowest in the AIC peer group. This is a great start to our objective to increase our investor base of retail investors, and we hope that the recent improvements in relative performance, combined with our own efforts, can help to drive this forward. This is beginning to be reflected in our shareholder register, where we are identifying more self-directed retail investors buying shares through the major investment platforms. ![]() As well as having a full investment toolkit, your Company also benefits from Fidelity’s large and experienced team of portfolio managers and analysts, the majority of whom are based in the markets they cover, giving them an invaluable advantage in terms of identifying new investment opportunities.Īt Board level, your Directors and I have been working hard to ensure that current and prospective investors are fully informed about the changes to the Company and the benefits they bring. It is worth noting that the open-ended FAST Emerging Markets Fund, which is run using the same approach, has outperformed the Index in seven of the last 10 discrete years to 30 June, in most cases significantly. However, your Board believes that Fidelity’s unique investment process, with its ability to hold short as well as long positions – thereby investing in the disruptors that can drive growth, and also making money from identifying the disrupted – is a key differentiating factor that is starting to feed into positive performance for the Company. You will find more detail on the contributors to absolute and relative performance in the Portfolio Managers’ Review on the following pages. ![]() The share price fell by 5.2% as the discount to NAV widened slightly during the year, from 12.0% to 14.6% (all performance figures stated on a total return basis). This is particularly encouraging during a period in which high inflation and tightening monetary policy in the West and disappointing data following China’s hotly anticipated post-Covid reopening have unsettled investors worldwide.ĭuring the 12 month period to 30 June 2023, the NAV of the Company fell by 2.6% in GBP terms, compared with a 2.8% decline in the benchmark index. Against a continued difficult global economic and geopolitical backdrop, net asset value (`NAV’) total return performance for the year ended 30 June 2023 has been slightly negative, but has outperformed the Company’s benchmark, the MSCI Emerging Markets Total Return Index (`the Index’). I am pleased to present your Company’s 34th annual report, my first as Chairman and covering the first full year under its new name and mandate as Fidelity Emerging Markets Limited.
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