S&P assigns Fund Management Ratings to two Fidelity Funds

Standard & Poor’s Fund Services, the leading provider of qualitative fund management ratings, has assigned Fund Management Rating to 2 Fidelity Funds, following a detailed qualitative evaluation of the investment process and management of these funds:

Fidelity Funds Asia Special Situations Fund "A"
Fidelity Investment Funds - South East Asia Fund "A"
Fidelity Funds Asia Special Situations Fund "A"

This fund has been managed by Joseph Tse since 2001. He has considerable investment experience, all of which relates to the Asian region, and has been a portfolio manager for over ten years.

In line with Fidelity's operation in other parts of the globe, resources covering the Asia-Pacific region are considerable. Tse makes good use of the relevant specialists but as with many experienced Fidelity managers, also conducts his own research with a extensive programme of company visiting.

The process has remained largely unchanged under Tse's tenure, with a core of quality growth stocks being combined with thematic, recovery and deep value ideas, many of which involve smaller-cap companies. The fund remains highly diversified at the stock level.

Performance from the fund has shown a significant improvement since the early part of 2005 with close to peer group median performance being replaced by strong relative returns. The manager puts this down to a number of factors, including a strengthening of the team which has increased market specific knowledge and greater debate and interaction amongst the portfolio managers in Hong Kong. While commodity related plays and the small-cap bias have undoubtedly helped performance, we take comfort from the fact that there have also been other sources of return such as stock selection in IT, financials and Korea.

Overall the experience of the manager in the region, the resources available and the improved performance allow the fund to achieve an S&P "A" rating.

Fidelity Investment Funds - South East Asia Fund "A"

Allan Liu took over this portfolio in August 2003 and has since managed it in line with the "A" rated Fidelity Funds South East Asia Fund. Liu is an experienced manager and is supported by Fidelity's strong and steadily growing resources in the region, including 57 fund managers and analysts spread across five different locations.

The manager clearly uses the input from this large team and the steadily growing number of holdings in the portfolio is largely a result of this increased flow of new ideas.

The approach is bottom-up and company specific within a broad thematic overlay. Stock selection tends to be tilted towards growth factors including returns on equity, earnings growth and management quality. However, cashflow generation and valuations also play an important part in Liu's stock selection process.

The fund is built in a gradualistic fashion irrespective of the index benchmark. In typical Fidelity style, Liu is not afraid to venture off-benchmark, as demonstrated by the purchase of some Australian resources stocks, seen as a more defensive way to play the booming Asian economies theme.

With the exception of 2004, when the fund's growth bias and zero exposure to Australia led to bottom quartile returns, under Liu the fund has secured a strong track record of outperformance, comfortably ranking in the top decile over the last three years.


Commonality between this fund and its already rated offshore version is deliberately very high. Liu is an experienced manager who has built a successful track record. The fund comfortably achieves an S&P "A" rating.