Fidelity Emerging Markets (FEML)

Emerging market equities have generated strong returns between the start of the year and the end of June, outperforming their developed market peers amid a period marked by geopolitical upheavals. However, Fidelity Emerging Markets (FEML) has done even better, outperforming the MSCI EM Index by nearly 18 percentage points. Contributors to Performance have included long positions in tech hardware names, such as Taiwan’s Elite Material and SK Square, the holding company for Korean memory producer SK Hynix.

Nick and Chris are constructive on technology and have increased exposure to the sector, adding to Taiwanese names such as Lotes, a manufacturer of CPU sockets used in AI servers. The Portfolio also remains overweight the materials sector, with the managers remaining constructive on the outlook for metals such as copper, which is underpinned by structurally higher demand and tight supply over the medium to long-term. Gold stocks feature amongst the portfolio’s holdings, albeit pared back from 2025 highs as managers Nick Price and Chris Tennant have taken profits since the start of the year.

Brazil is one of the portfolio’s largest country overweights, with Nick and Chris expecting Brazilian equities to benefit should we see a reduction in interest rates. In addition, they believe the presidential election in October could be a potential catalyst for improvement in market sentiment. As such, they have added to some of their positions in Brazilian stocks, such as in Itaúsa, a holding company for the banking group Itaú Unibanco. In contrast, the portfolio remains underweight India. Nick and Chris highlight high valuations in the market, which they believe do not fully reflect risks such as rising competition in the financial sector and the threat of AI to some IT services businesses.