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Fidelity South East Asia Fund research update

Investments can go down as well as up so there is always a danger that you could get back less than you invest. Nothing here is personalised advice, if unsure you should seek advice.

Teera Chanpongsang took over management of the Fidelity South East Asia Fund in January 2014. His investment style is similar to that of his predecessor, Allan Liu, meaning the fund continues to be focused towards high quality companies operating in industries with barriers to entry, which he believes can grow their earnings faster than their peers.

A number of changes have, however, since been made to the portfolio. Teera Chanpongsang has historically managed more concentrated portfolios and as such, the number of stocks held has been reduced considerably from 126 to 95. He also tends to be more sensitive to valuations, meaning he will only invest in businesses he feels represent good value.

Under his stewardship, the fund's exposure to financials has increased to 35.8% of the portfolio and is partly due to the manager's increasingly positive outlook for Chinese insurers. As the nation's wealth rises, Teera Chanpongsang believes there will be increased demand for insurance products in China. The insurance industry could also benefit from favourable government policies, with the introduction of tax benefits for health insurance companies acting as a tailwind. He believes current holdings including China Life Insurance and AIA Group are at the forefront of these changes. In the case of the latter, he expects the company could also benefit from its strong brand name and well-reputed management team.

Teera Chanpongsang has also introduced exposure to India to the portfolio. The fund has traditionally not invested in India as the country is not a constituent of the fund's benchmark, the MSCI AC Far East ex Japan Index. However, the manager views India as one of the most promising domestic stories in the region and has included off-benchmark holdings in a number of Indian companies. This exposure has added value over the past year and current holdings include HDFC Bank.

Going forwards, there is potential for the fund's weighting in India to increase further. On 1 March 2015, the fund's benchmark will change to the MSCI AC Asia ex Japan Index, which includes India whereas the current benchmark does not.

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Our view on this fund

The Fidelity South East Asia Fund has grown by 17.3% under Teera Chanpongsang's management. This compares with 16.0%* for the average fund in the sector, though this is over a short period and is not a guide to future performance. All investments should be held for the longer term.

Annual percentage growth
Feb 10 -
Feb 11
Feb 11 -
Feb 12
Feb 12 -
Feb 13
Feb 13 -
Feb 14
Feb 14 -
Feb 15
Fidelity South East Asia 31.1% -9.9% 10.9% -5.2% 21.9%
IA Asia Pacific ex Japan 22.7% -5.9% 14.7% -6.6% 19.8%
MSCI AC Far East ex Japan 27.1% -5.3% 13.9% -6.6% 21.4%

Past performance is not a guide to future returns. Source: Lipper IM* to 02/02/2015

In addition, Teera Chanpongsang has managed the Fidelity Emerging Asia Fund since April 2008, while he also previously managed a couple of country-specific portfolios. We view him as a competent and experienced fund manager, who is also able to draw upon Fidelity's vast pool of research analysts in the Asian region. That said, we currently believe there are a number of other fund managers investing across Asia with stronger track records over a longer period. This adventurous fund, therefore, does not currently feature on the Wealth 150 list of our favourite funds across the major sectors.

Find out more about this fund including how to invest

Please read the key features/key investor information document in addition to the information above.

The value of investments can go down as well as up, this means you could get back less than you invested. Therefore all investments should be regarded with a long term view. No news or research item is a personal recommendation to deal. If you are unsure about the suitability of an investment please contact us for advice.
Important information - Please remember the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. This article is provided to help you make your own investment decisions, it is not advice. If you are unsure of the suitability of an investment for your circumstances please seek advice. No news or research item is a personal recommendation to deal.

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