# Fidelity Emerging Markets Limited (FEML): A Compelling Choice for Emerging Market Exposure

- Link: https://www.directorstalkinterviews.com/fidelity-emerging-markets-limited-feml-a-compelling-choice-for-emerging-market-exposure/4121169495
- Published: 2024-08-27T07:30:00+01:00
- Author: Anthony Fox

**[Fidelity Emerging Markets Limited](https://www.directorstalkinterviews.com/company/fidelity-emerging-markets-limited/feml.l)**(
[LON:FEML](https://www.directorstalkinterviews.com/company/fidelity-emerging-markets-limited/feml.l))
continues to stand out as a highly attractive option for investors seeking exposure
to emerging markets. Managed by seasoned professionals Nick Price and Chris Tennant,
FEML benefits from their extensive experience and deep understanding of the companies
and management teams within this dynamic sector. The trust’s flexible, go-anywhere
investment approach, combined with its ability to take both long and short positions,
positions FEML as a unique and highly differentiated player in the market.

**Strong Performance Driven by Active Management**

Over the past 12 months, FEML has demonstrated robust performance, delivering a 
NAV total return of 22.1%, significantly outpacing the MSCI Emerging Markets Index,
which returned 14.7%. This impressive performance is largely attributed to the managers’
effective stock selection, particularly within the short book, where notable successes
included short positions in an Asian utility company and an Asian battery maker.
The managers capitalised on specific weaknesses in these companies, showcasing the
effectiveness of FEML’s active management strategy.

On the long side, the trust saw strong contributions from companies such as Kazakhstan’s
Kaspi, which has leveraged its dominant market position across e-commerce and payments
to deliver impressive revenue growth. Similarly, the recovery in international travel
bolstered the performance of MakeMyTrip.com, India’s leading online travel agency.
The trust also benefited from its position in TSMC, the Taiwanese semiconductor 
giant, which continued to see strong demand for its products.

**Strategic Positioning in Emerging Markets**

One of FEML’s key strengths is its ability to adapt and capitalise on emerging opportunities
across diverse markets. The managers have strategically positioned the portfolio
to take advantage of long-term structural trends, such as the shift towards friendshoring
and nearshoring, which is benefiting countries like Mexico and Vietnam. FEML’s holdings
in these regions, including companies like Grupo Aeroportuario del Pacífico in Mexico
and FPT in Vietnam, are well-placed to gain from these trends.

The trust’s cautious yet opportunistic approach in China also reflects its ability
to navigate complex market environments. While China’s economic reopening presented
challenges, the managers have adjusted their exposure, adding positions like Anta
Sports to diversify within the sportswear market. The use of options to gain exposure
to China further underscores the trust’s flexible and innovative investment strategy.

**Analyst’s View: A Differentiated Investment Proposition**

Josef Licsauer, an analyst at Kepler Partners, highlights FEML’s differentiated 
approach as a key advantage. The trust’s ability to take short positions, particularly
in the context of a challenging economic environment, provides a unique source of
alpha that is unmatched in the AIC Emerging Markets sector. This flexibility, combined
with the managers’ deep expertise and on-the-ground research, positions FEML to 
continue delivering strong performance, even in uncertain markets.

Licsauer also notes the proactive measures taken by FEML’s board, including a robust
buyback programme and a completed tender offer, which have contributed to the narrowing
of the trust’s discount. Trading at an 11.8% discount, in line with its five-year
average, FEML remains an attractive option for investors seeking emerging market
exposure.

**In Closing**

Fidelity Emerging Markets Limited offers a compelling investment proposition for
those looking to capitalise on the growth potential within emerging markets. With
its experienced management team, flexible investment strategy, and strong recent
performance, FEML is well-positioned to navigate the complexities of the global 
market and deliver value to its investors. As emerging markets continue to evolve,
FEML’s differentiated approach and strategic positioning make it a standout choice
for investors.

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