Fidelity International is seeking to tap into the natural resources market with a fund investing in emerging Europe, the Middle East and Africa (EMEA).
The new Luxembourg-domiciled Fidelity Funds Emerging Europe, Middle East and Africa fund is run by Nick Price, a nine year veteran at Fidelity who has been manager of the group's internal EMEA investment pool since November 2005. He will seek to profit from a number of long-term investment trends in these regions including the impact of global industrialization, rapid urbanization and continued strong demand for natural resources. In particular, the fund will hold stakes in between 50 and 70 companies that focus on the Czech Republic, Egypt, Hungary, Israel, Jordan, Morocco, Poland, Russia, South Africa and Turkey.
The fund's benchmark will be the MSCI Emerging EMEA Index. However, the manager will be able to invest outside this index into other countries such as Bulgaria, Estonia, Kazakhstan, Latvia, Lithuania, Oman, Qatar, Romania, Slovenia and the United Arab Emirates.
Fidelity believes these countries are rich in natural resources having more than 80% of the world's proven oil reserves, according to BP, 97% of the world's platinum reserves, 95% of the world's chromium and an abundance of other resources including iron ore, nickel, copper and gold. Price said: “The region of emerging Europe, Middle East and Africa offers one of the most exciting investment opportunities in today's market. It has an investment universe of $1.5 trillion (€1 trillion, £750 billion) and with low correlation to the US, Europe and UK, and low inter-market correlation across the region it offers diversification benefits and the potential for significant risk-adjusted returns.
As China and India continue to industrialize we will see rising levels of consumption, resulting in growing demand for oil and commodities from these countries. The EMEA region will be a direct beneficiary of this trend. In addition, the EMEA region is enjoying significant productivity gains that are a direct result of the global export of cheap manufactured goods from China and India. While this would be a potential threat to developed economies, the EMEA region can benefit from first time access to cheaper technology.”
The fund has dollar, Euro and sterling share classes. The Sterling share class has an initial charge of 3.5% and an annual management charge of 1.5%. The minimum investment in this share class will be £1,000 for lump sum investments and £50 for monthly savings plans. (citywire.co.uk)