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Key Balanced Model - Portfolio Change

Introduce – Fidelity Global Emerging Markets

Rationale

The Investment Committee has made a change to the portfolio by allocating to a dedicated and specialist global emerging markets manager in Fidelity Global Emerging Markets. The fund is managed by highly regarded portfolio manager Alex Duffy who has managed the strategy since 2013, has plenty of emerging market experience, and makes very good use of the large Fidelity analyst platform.

Duffy helped found the emerging markets team which is now more than 40 strong. Duffy's disciplined approach stands out, with a strong focus on company governance, sustainability, and balance sheet, whilst avoiding businesses with opaque business practices or ownership structures. The analyst team considers a company's franchise strength, competitive advantages, market structure, potential market size, and cashflow based valuations. Macro analysis is also incorporated into the valuation of each company.

Duffy has little regard for the benchmark, which we like, and has an impressive long-term track record. Duffy is one of the best portfolio managers we've come across in the emerging markets space and we like his risk-aware approach. The addition of Fidelity to the portfolio comes at the small reductions across the Global equity funds already held in the portfolio, nicely complements these funds, and provides further diversification into a future strong growth area in global markets. 

The Financial Keys Investment Committee have negotiated a discount on the management fee of the Fidelity Global Emerging Markets Fund within the Key Managed Models. The standard management fee for the Fidelity Global Emerging Markets Fund is 0.99%, this is discounted to 0.89% for Financial Keys clients, with the rebate passed on to clients in full.

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