Interactive Investor

Emerging market trust receives green light to switch management group

5th October 2021 12:26

Kyle Caldwell from interactive investor

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The FTSE 250-listed investment trust will hand Fidelity the management keys if shareholders approve. 

Shareholders of Genesis Emerging Markets (LSE:GSS) have given the green light for the investment trust to switch management group to Fidelity.  

In an emergency general meeting shareholders approved the company changing its investment objective and investment policy. In addition, shareholders gave their blessing for the trust, which is listed on the FTSE 250 Index and has over £1 billion of assets, to change its name to Fidelity Emerging Markets Limited (LON: FEML). Fidelity took over the management of the trust yesterday (4 October). 

Nick Price, who has for over a decade been the lead manager of the open-ended Fidelity Emerging Markets, will manage the trust. He will be supported by assistant portfolio manager Chris Tennant.

Fidelity Emerging Markets Limited’s investment objective will be to achieve long-term capital growth from both listed and unlisted emerging market companies, as well through using derivatives to short shares (profit if a share price falls). 

The annual management fee will drop from 0.9% to 0.6% a year. In addition, Fidelity has also agreed to waive its investment management fee for the first nine months following its appointment.

Commenting on the appointment of Fidelity, Hélène Ploix, chair of Genesis Emerging Markets, said: "We are very pleased with the substantial support shown by shareholders for the proposed changes to the company's investment management. We would like to express our appreciation to Genesis Investment Management for its contribution to the company over many years and we very much look forward to working with Fidelity International."

Genesis Investment Management had managed the trust for more than 30 years. In July, when the trust's board announced the proposals to change management group, Genesis pointed out that the trust's share price had outperformed its benchmark, the MSCI Emerging Market Total Return Index, since inception and over 10, five, three and one year(s) to 30 June 2021.

Arindam Bhattacharjee, managing partner at Genesis Investment Management, said at the time: “We are proud to have delivered excess returns for shareholders in the trust for over three decades, while staying true to our long-term investment approach. The board’s proposal represents a major change in both investment policy and style of the trust. Ultimately, the company belongs to its shareholders, and we believe that their wishes must remain paramount.”

 

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