Fidelity Emerging Markets Limited (LON:FEML) has announced its monthly factsheet for August 2024.
Portfolio Manager Commentary
Emerging markets (EM) gained in August but underperformed developed markets. Earlier in the month, EM equities pulled back amid growing risk-off sentiment as concerns around a US recession emerged and the yen carry trade unwound. Markets then rebounded in the second half of the month as recessionary concerns eased and expectations emerged that the Fed would cut interest rates in September, while a weaker US dollar also provided support.
The portfolio outperformed the index in a falling market over the month. At a sector level, stock picking in financials enhanced gains. Brazilian financial institution Nu Holdings underpinned returns as sentiment towards Brazilian stocks strengthened amid expectations that interest rates from the Fed would create a more conducive environment for the central bank to continue easing policy. South Africa’s Standard Bank rose following the release of encouraging half yearly results.
Conversely, the communications services and energy sectors were the largest detractors from relative returns. In communication services, a short position in Polish cable operator weighed on the performance as the share price rose during the month. In energy, Canada listed Africa Oil detracted as oil prices retreated over demand concerns. It reported breakeven quarterly results.
The Company’s NAV rose 17.8% during the 12-month period ended August 2024, outperforming its reference index which rose by 10.9%. The Company’s share price rose 19.3% over the same period.
