If you’re scratching your head for growth, one ASX managed fund option might be the Fidelity Global Emerging Markets Fund (ASX: FEMX). Here’s what you need to know about this ASX-listed managed fund.
About ETFs & Managed Funds
ETFs are investment funds that are listed on a securities exchange. They can be ‘managed funds’ or ‘index funds’, or in other words, active or passive.
Typically, ASX ETFs give an investor exposure to many different shares or assets with a single purchase, offering one of the quickest and easiest methods of achieving diversification. The Best ETFs website has a list of Australian ETFs.
What The FEMX Fund Does
The Fidelity Global Emerging Markets Fund is a managed fund that has been operating since 2013. It listed on the ASX in November 2018, making it easier for investors to enter and exit the fund.
The FEMX fund aims to beat the MSCI Emerging Markets Index NR over the recommended investment timeframe of seven-plus years. It hopes to achieve this performance by investing in a concentrated portfolio of 30 to 50 companies based in emerging markets such as China, India, South Africa, Brazil and Indonesia.
Around 29.6% of the portfolio is allocated to financials, while the consumer discretionary, information technology and consumer staples sectors all receive an allocation of more than 10% each.
Past Performance (Is No Guarantee?)
As always, keep in mind that past performance is not a reliable indicator of future performance.
Since inception, the FEMX fund has done exactly what is expected from a managed fund -– it has outperformed its benchmark index and by a margin high enough to justify the fees.
Since December 2013, the Emerging Markets Index has returned 8.26% per year while the fund has returned 11.26% per year. The last year has been particularly successful, with the fund returning 17.53% compared to 6.56% from the index.
FEMX Fees And (Some) Risks
The management costs for the FEMX fund are 1% per year, which seems justified given that the fund has outperformed the index by 3% per year since inception. However, there are many risks with this fund to keep in mind.
Emerging markets can be more volatile than developed markets such as the ASX, and the investor must put a lot of faith in the fund manager because many of the portfolio holdings are companies that an Australian investor may not be familiar with.
As with all managed funds, the quality of the fund really comes down to who is managing it.
Besides that, the concentrated portfolio means more risk, as a “bad” pick can have a bigger impact on the overall portfolio performance.
There are many risks to consider, but the Fidelity Global Emerging Markets Fund is one that I would certainly consider adding to my portfolio as a small, high-risk tactical position.
Fidelity is a trusted manager in the financial world and the portfolio manager Alex Duffy has proven his ability to pick outperforming companies over the last six years.
For some quality companies closer to home, have a look at the companies mentioned in the free report below.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.