Fidelity Indonesia Y-Dis-USD

Analyst Report
Morningstar's Take

by Samuel Lo

Fidelity Indonesia is run by Madeleine Kuang. Kuang shows promise and brought sensible changes to the investment process, though it will take time to prove their effectiveness. Under our enhanced ratings framework, which places a greater focus on fees and benchmark-relative performance, a Morningstar Analyst Rating of Neutral is assigned to all the share classes, including the clean share class Y-Acc-USD.Kuang took over this strategy, as well as the Fidelity ASEAN, Singapore, Malaysia, and Thailand strategies, on 1 June 2018 after Gillian Kwek’s retirement. Kuang has 17 years of investment experience and joined Fidelity in 2010. She has been covering ASEAN stocks since 2012 and displayed a good grasp of the investment cases behind each portfolio holding and of the regional market dynamics during our meeting in February 2020. She is supported by four dedicated ASEAN analysts and nine regional sector analysts with ASEAN coverage, sporting 11 years of industry experience on average. She also benefits from a broader team of 37 analysts across Asia Pacific ex Japan, one of the strongest teams in the region in our opinion. While we believe Kuang has the potential to manage this strategy aptly, we need more time to build conviction in her ability to successfully steer the fund over the cycle.Kuang follows a bottom-up investment approach and focuses on stocks that fit into one of three buckets: “core compounders,” “future leaders,” and “mispriced stocks.” The framework helps her generate ideas, even though the thought process behind the allocation among the three categories can be fluid at times. Over the past year she increased the portfolio’s active share against its prospectus benchmark, the MSCI Indonesia IMI Index, capped at 8%, from 25%-35% to 35%-45%. We welcome these changes but would like to see how consistently and effectively these will be executed.During Kuang’s tenure from 1 June 2018 through 31 Jan 2020, the clean share class Y-Acc-USD returned 4.26% annualized, lagging the 5.83% annualized gain of the MSCI Indonesia Index, the Indonesia equity Morningstar Category benchmark. That said, it fared well against the annualized loss of 2.7% for the prospectus benchmark, the MSCI Indonesia IMI 8%-capped Index, and it ranked in the 7th percentile within the category.

Morningstar Analyst Rating™
To find out how Morningstar rates a fund click here.
Portfolio RoleGiven the potential volatility associated with a single-country emerging markets strategy, this is best used as a satellite allocation in a diversified portfolio.
Morningstar Pillars
Madeleine Kuang shows promise and is supported by one of the strongest analyst teams in the region.
ParentAbove Average
Changes to the senior management team require monitoring, but we continue to consider Fidelity International an above-average parent.
Recent tweaks are encouraging, but it is still unproven.
Madeleine Kuang took over this strategy in June 2018, and early results were promising.
Morningstar Analyst RatingMorningstar evaluates funds based on five key pillars, which it's analysts believe lead to funds that are most likely to outperform over the long term on a risk-adjusted basis.
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In order to provide consistency across the report data provided by different Asset Managers, the calculated data points presented are generated using Morningstar’s proprietary calculation methodology which is set out in more detail at(

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