Genesis IM says investors should be allowed to sell EM trust ahead of Fidelity handover

Shareholders should be able to walk close to NAV given the ‘significant’ change in strategy

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Genesis Investment Management thinks shareholders in the Genesis Emerging Markets fund should be allowed to fully exit their positions as it prepares to lose the mandate to Fidelity International.

The investment trust’s board announced in July its intention to appoint a new portfolio manager, Fidelity International, and change the investment policy. Fidelity emerging markets manager Nick Price is poised to run the trust alongside assistant portfolio manager Chris Tennant.

Genesis then hit back, saying the proposed policy, which includes a lead portfolio manager, derivatives and shorting, is not in keeping with its investment philosophy.

The trust’s board has proposed a vote on the change of manager and the new investment policy to take place at the EGM on 1 October. Fidelity’s appointment would bring an end to more than three decades of Genesis at the helm since the trust’s inception.

‘Significant’ change in strategy

On Monday Genesis publicly reiterated its position on the future of the trust, saying it was “particularly important” that investors should be able to sell out entirely given the “significant” change in investment strategy.

It said it understands that a number of the fund’s shareholders support its proposal of including an option for a full exit close to net asset value.

Genesis Investment Management managing partner Arindam Bhattacharjee said: “In the interests of supporting transparency and serving the needs of all shareholders, Genesis wishes to make its position clear. The board’s proposal represents a major change in both investment policy and style of the fund. Ultimately, the company belongs to its shareholders, and Genesis believes that their wishes must remain paramount.”

“Genesis is proud to have delivered excess returns for shareholders in the fund for over three decades, while staying true to its long-term investment approach. The foundations of its long-term success remain in place. Genesis’ absolute focus on investment performance means resisting any external pressures to amend its approach in return for short term, transient gains. Its active investment strategy of undertaking deep fundamental research, using a team based approach to unearth long-term investments in quality businesses at attractive prices, remains as relevant today as ever in emerging markets.”

See also: Fidelity adds to trust stable with £1.2bn emerging markets mandate win


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