The fund manager, Teera Chanpongsang, will invest the majority of the portfolio in China, India and ASEAN countries (ex Singapore) at launch. However, he will also have the capacity to invest up to 30% of the portfolio in the frontier markets of Bangladesh, Pakistan, Sri Lanka, Vietnam and other newer emerging economies in the Asian region as opportunities arise.

Mr Chanpongsang, a 14-year veteran in Fidelity’s 100- strong Asian investment management team*, will invest in these frontier markets either directly through local exchanges or through companies listed on the region’s more established markets such as Malaysia.

Tap into the region’s rapid growth

Mr Chanpongsang, who is based in Hong Kong, says the Emerging Asia region offers the prospect of higher returns for investors than developed markets because of its faster economic growth, favourable demographics, rising investment in fixed assets and expanding domestic consumption.

“Vietnam is one of the fastest growing economies in Asia over the past ten years**. The country’s long term rate of growth is likely to be sustainable, partly because of strong inflow of foreign direct investment after the joining of the WTO, and also because of the young and expanding population, which will drive domestic consumption growth in the country.” says Mr Chanpongsang.

Direct or indirect investment

Mr Chanponsang thinks, however, that direct exposure to Vietnam companies through the local exchange is currently unattractive as valuations have been high. “For the time being I prefer to invest in companies elsewhere in the region that have economic exposure to Vietnam. For example, in one of my other portfolios I invest in Parkson Holdings, a Malaysian company with 30 department stores in its home market. It also has 39 stores in China and 3 in Vietnam. Domestic consumption in these countries is strong and rising and with same store sales growth of around 20% in China and 25%** in Vietnam the potential for growth is significant.”

On the other hand, Mr Chanpongsang is happy to invest directly into the Pakistan market which has a much greater choice of companies listed. One of his portfolios includes a holding in MCB Bank, the most profitable bank in Pakistan with return on equity (ROE) of 33%.** The bank has exposure to a fast-growing economy and benefits from an under-penetrated banking sector.

About the fund

Domiciled in Luxembourg, the FF Emerging Asia Fund will typically invest in 80-120 stocks from a universe of almost 1,000. The Fund’s benchmark is the Custom MSCI Emerging Asia Composite Index. The initial charge is 5.25% and the annual management charge is 1.5%. The minimum investment in the fund is $2,500. The manager has the option to make use of the wider investment powers available under UCITS III.

Fidelity’s Asian equity team

With a presence in Tokyo since 1969, Fidelity has since expanded its investment research team throughout the region and now has around 100 investment professionals in Australia, Hong Kong, India, Japan, Korea, Singapore and Taiwan. Over 25 of these investment professionals specialise in emerging Asia.

About the manager

Teera Chanpongsang joined Fidelity in 1994 as a research analyst. He has previously managed the FF Thailand and FF Global Telecommunications funds as well as a segregated emerging Asia fund. Teera is based in Fidelity’s Hong Kong office.

FIL Limited (“FIL”) and its subsidiary companies serve the major markets of the world y providing investment products and services to individuals and institutional investors utside the US. FIL Limited manages a total of € 208.5 billion of assets*.

 

*Source: Fidelity as at 31.12.07

**Source: Fidelity, April 2008