In this week’s Monday Manager interview, Chris Tennant, co-portfolio manager of Fidelity Emerging Markets trust (FEML) tells us about his ambition to become a portfolio manager from early on, the trust’s long positions in financials and short positions in Asian battery material suppliers, and why a manager should never fall in love with a company or team.
How long have you been running Fidelity Emerging Markets and what’s your career background? Did you always want to be a fund manager?
I started my career as an equity analyst at Fidelity around 15 years ago now, originally covering European transportation before rotating into the emerging markets team. In 2015 I then took on a role as an emerging markets shorting analyst, before becoming a global emerging markets portfolio manager in 2019. From early on in my career at Fidelity it had been my ambition to become a generalist portfolio manager.
I have been running FEML as co-PM alongside Nick Price, who is lead PM, since Fidelity took over management of the trust in October 2021.
What sets FEML apart from other emerging markets portfolios?
One of the key features that sets FEML apart is its extended toolkit, which creates additional opportunity for us to add value for clients. We draw on a broad range of tools, from the ability to increase gross exposure, to the capacity to invest further down the market-cap spectrum, take out short positions, and use options.
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Which companies are you targeting for investment? Why do they offer potential future returns?
One of my favourite investment opportunities currently is Alfamart, a leading Indonesian grocery retailer, which is trading at a historical low. Formal retail penetration remains low in Indonesia and as a result, the company benefits from a decade long runway of rolling out new stores, meaning the duration of growth is very long. Alfamart also has a strong competitive position, as the stronger player in a duopoly market.
We also like Kazatomprom, one of the largest uranium miners in the world. The rapid expansion of AI and data centre infrastructure will drive an unprecedented demand for energy, and nuclear power is one of the potential solutions to this growing demand, which should support uranium prices.
And where are you finding opportunities for short positions?
We currently hold several short positions in indebted Asian battery material suppliers, that have weak balance sheets and whose customers are losing market share to Chinese peers such as CATL, which we own in the long book. We also have several short positions in Asian chemical and steel product manufacturers, operating in markets suffering from oversupply.
Financials have been a longstanding overweight. Can you explain why? Is this set to continue?
We continue to see significant opportunity in financials, particularly in smaller EM countries, where banking sectors are often oligopolistic, generating strong returns on equity while trading near book value. In Hungary, for example, we like OTP Bank, a dominant franchise well positioned to benefit from falling interest rates given its largely fixed-rate asset base. We also see long-term opportunity in Indonesia, where banks such as Bank Mandiri trade on single-digit earnings multiples and offer attractive dividend yields.
Which other sectors or themes are you favouring in EMs?
We currently like the theme of electrification. The shift in global power generation will require extensive grid reinforcement, driving copper demand alongside electric vehicles and data centres, whilst supply of the metal remains constrained following a decade of underinvestment. We have exposure to the theme via copper miners as well as directly through Sieyuan Electric, a Chinese electrical equipment maker.
We also like gold miners, which stand to benefit from strength in gold prices as central banks continue to shift reserves away from US Treasuries, whilst smaller miners could benefit from rising M&A activity.
See also: Trust Talk with Marcel Stötzel, co-manager, Fidelity European Trust
What changes did you make on the portfolio in 2025?
We actively adjusted the China exposure in the long book, adding to technological leaders with clear competitive advantages in the industrials space, where we are seeing rapid innovation. We’ve also added to ‘experience’ categories within the consumer space like music streaming and travel, which we think are less penetrated than sectors like apparel, and have reduced exposure to internet companies, where competition has been intensifying.
In the short book, we have added short exposure to a Latin American oil producer, given the negative fundamentals for the commodity, as well as the company’s stretched balance sheet and weak management.
What are the prospects for EMs going forward? It has been said that EMs will benefit from a weakening dollar and favourable valuations… is this a view you share?
The outlook for EM going forward looks positive. The valuation backdrop is favourable, with EM trading at a multi-decade discount to the US even after the recent rally, despite the fact that the bulk of the tech supply chain sits in markets like Taiwan and Korea, meaning these countries will see much of the value accrual from AI and datacentres.
The fiscal backdrop should also be a tailwind. While the US drew on the fiscal toolbox during Covid, we saw the opposite in most EMs, and we are now seeing this dynamic shift, with China in particular looking to reflate the economy. Fiscal largesse in the US has also resulted in a weaker dollar, which should boost commodity exporting economies and support local currencies.
Give us one tip for an upcoming fund manager?
Never fall in love with companies or management teams. Understanding your emotional biases is incredibly important – don’t dogmatically hold on to a thesis when the fundamental outlook is shifting against you.
See also: Fidelity’s Alex Wright: Catalyst for UK equity outperformance has already happened
