London, 7 January 2008 – Investors with a taste for commodities may want to consider the newly launched
EMEA fund from Fidelity International. The Emerging Europe, Middle East and Africa region is home to numerous investment opportunities – in particular the chance to tap into commodities.
In the last year alone, the price of oil has increased by 70% and is approaching $100 per barrel*. While the main consumers of oil continue to be the more developed economies, developing countries such as China and India are fast becoming the drivers of incremental demand. According to Fidelity International, the EMEA region is set to be a prime beneficiary of this long-term trend. With the Middle East accounting for 62% of proven reserves, Eastern Europe 10.1% and Africa 9.5%, the region accounts for more than 81.5% of the world’s proven oil reserves**.
Oil is not the only resource in which EMEA is rich. The region is also home to many of the most highly sought-after resources including platinum (97% of the world’s reserves), chromium (95%), manganese (45%) and iron ore (42%)***. Demand for these metals is particularly strong because of increased use by industry and manufacturing.
Having launched an offshore version of the fund in June last year, UK investors can now invest in the EMEA region through Fidelity’s OEIC version of the fund. It will be run by Nick Price, a 9 year veteran at Fidelity, who has run the offshore version of the fund since its launch in June last year and produced returns of 22.5%**** in the first 6 months.
Nick Price, comments: “The new onshore fund will enable UK investors to benefit from the commodities theme while at the same time diversifying their portfolio across both new geographical regions and investment opportunities.
“An example of a company that is a prime beneficiary of the demand in natural resources is African Rainbow Minerals. ARM is a South African mining and metals company, which has operations in platinum, copper, nickel, ferrous materials, alloys, iron ore and gold. It has benefited from buoyant commodity prices and improved production results from the majority of its long life resources: increasing production of nickel and iron ore, used to make stainless steel, to take advantage of growth in demand. The group’s platinum division contributed to strong earnings growth as platinum prices have reached record levels. Indeed, ARM recorded a rise in headline earnings of 318% in the six months ended 31 December 2006*****.”
FIF Emerging Europe, Middle East and Africa Fund
The fund, which is domiciled in the UK, aims to generate long-term capital growth through investing primarily in securities of companies which have their head office or which have a predominant part of their activity in Central, Eastern and Southern Europe (including Russia), Middle East and Africa. It will typically hold between 50 and 70 stocks.
The benchmark of the fund is the MSCI Emerging EMEA Index (capped 5%). However, the manager will not be constrained to this benchmark and will therefore be able to invest in other countries in the region such as Bulgaria, Estonia, Kazakhstan, Latvia, Lithuania, Oman, Qatar, Romania, Slovenia and the United Arab Emirates, where suitable opportunities arise.
The fund has an initial charge of 3.5% and an annual management charge of 1.5%. The minimum investment is £1,000 for lump sum investments and £50 for monthly savings plans. The fund can be held within an ISA, PEP, SIPP or investment bond wrapper.
FIL Limited (“FIL”) and its subsidiary companies serve the major markets of the world by providing investment products and services to individuals and institutional investors outside the US. The FIL Organisation manages a total of £148 billion of assets******.
Notes to editors:
*Source: http://octane.nmt.edu/gotech/Marketplace/Prices.aspx
**Source: BP Statistical Review of World Energy, June 2006. Statistics based on 2005 totals
***Source: U.S. Geological Survey, Mineral Commodity Summaries, January 2007 Oil: Source of data: BP Statistical Review of World Energy June 2006 *Platinum includes all platinum group metals - platinum, palladium, rhodium, ruthenium, iridium, osmium.
****In US Dollar terms to 30.11.07. Source: Morningstar. Basis: bid-bid with net income reinvested. Data Source: © 2007 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
*****Source: ARM interim results, www.arm.co.za, 20 February 2007
******Source: Fidelity as at 30.09.07
Any opinions expressed are made at the time of writing and can be subject to change without notification. The value of investments can go down as well as up and an investor may not get back the original amount invested. For funds that invest in overseas markets, changes in currency exchange rates may affect the value of an investment. Investments in small and emerging markets can be more volatile than other more developed markets. Past performance is not a guide to future returns. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only. Investors should also note that the views expressed may no longer be current and may have already been acted upon by Fidelity. The Authorised Corporate Director of Fidelity Investment Funds is FIL Investment Services (UK) Limited. The Full Prospectus and Simplified Prospectus for this fund are available from Fidelity on request. Fidelity Funds and Fidelity Funds II are open-ended investment companies established in Luxembourg with different classes of shares. The UK distributor of Fidelity Funds and Fidelity Funds II is FIL Investments International. Fidelity means FIL Limited (FIL), established in Bermuda, and its subsidiary companies. Assets and resources as at 30.09.07 are those of FIL. Fidelity, Fidelity International and Pyramid Logo are trademarks of FIL Limited.
