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Fidelity soft-closes EM equity and Asian HY funds

Fidelity soft-closes EM equity and Asian HY funds

Asset management giant Fidelity has soft-closed two funds to new investors after both breached respective capacity limits, Citywire Selector has learned.

The first to close is the $1.83 billion Fidelity FAST Emerging Markets fund. The fund, which is managed by Citywire A-rated Nick Price, will be closed to new investors from September 28 2016.

In a letter to shareholders seen by Citywire Selector, Fidelity said the fund had reached capacity limits initially introduced in July 2013.

The fund was re-opened in investors in September 2015 following a soft closure and massive inflows previously seen in 2013. However, the increased interest has forced Fidelity to once again take action.

Commenting on the closure, a spokesperson for Fidelity said: ‘To protect the interest of existing investors and to ensure the Fidelity FAST Emerging Markets fund can remain open for them as long as possible, we will once again be implementing a capacity management programme for the fund from Monday 28 September.’

‘This will be similar to the programmes we have applied to this fund in the past. We will restrict subscriptions from new investors into the fund, and implement a quota system for existing investors.’

Asian high yield

Meanwhile, the $3.14 billion Fidelity Funds – Asian High Yield fund, which is managed by Citywire A-rated Bryan Collins, was closed on August 31 2016 to new investors after experiencing significant inflows.

In a separate letter to shareholders, the Fidelity said there would be no change to the existing investment objective and policy of the Asian high yield fund. Current investors will still be able to add subscriptions into the fund.

 ‘While the growth of the fund is a positive affirmation of our investment strategy and risk management approach, we are mindful that the fund should not reach a level which could begin to compromise our ability to maintain its attractive risk and income profile, and with it, the performance track record that it has achieved,’ a spokesperson said.

‘We will continue to monitor the fund’s asset levels closely and as always regularly review market conditions. We will communicate any further changes, in the event that we continue to experience significant inflows into the fund and need to take further action.’

Over a three year period to the end of August 2016, the Fidelity FAST Emerging Markets fund returned 9.17% in US dollar terms. This compares to a 4.50% rise by its Citywire-assigned benchmark, the MSCI EM TR USD, over the same time frame.

Meanwhile, the Fidelity Funds Asian High Yield fund returned 25.75% over the same three year period in US dollar terms. This compares to a rise of 30.92% by its Citywire-assigned benchmark, the BofA Merrill Lynch Asian Dollar Cor HY Cons TR USD, over the same time frame.

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