Best Equity Fund House -- Fidelity International
M: Morningstar T: Timothy Orchard, Chief Investment Officer, Asia Pacific- ex Japan, Fidelity International
M: What is your outlook for 2017 specific to the markets you cover, and how are you positioned to take advantage of opportunities and/or mitigate potential risks?
T: The outlook for the Asian region is reasonably positive. The region has underperformed much of the rest of the world since 2011, as the US dollar strengthened and the commodity cycle turned down. Furthermore, positioning data suggests that on average, global funds are underweight the region. This is reflected in valuations where there is significant support for regional stock markets.
Given the more tumultuous developments outside of Asia - be that the partial annexation of a European sovereign nation, Brexit or the short-term policy uncertainty created by the US election result - it seems credible to argue that emerging Asia should not necessarily carry a significant political governance discount to her Western brethren.
Structural reform progress in key markets such as China and India will continue to support Asian economies.
M: Can you comment on the macro risks in the global economy, such as the change in leadership in the US, and the significant headwinds faced by emerging markets? How do these risks affect your investment decisions?
T: Global trade policy and geopolitical risks have risen in recent months. Whilst much remains uncertain, key risks include the potential for a rise in protectionist trade policies after several decades of deals which typically favoured free trade and geopolitical risks caused by any changes in US foreign policy. From an economic perspective, the spectre of higher US interest rates may cause some concern. But if any rise in inflation that precipitates higher rates is caused by higher growth rather than cost push inflation, this should not have a significantly negative effect on Asia.
M: What do you think are the success factors in your corporate culture than enables your firm to consistently deliver for investors?
T: Our focus on the client is paramount. Fidelity International is a privately-held, independent investment firm. Our clients’ interests and our own are fully aligned.
Building on active, bottom-up research, we create the competitive advantage that delivers superior returns for our clients. We have one of the largest global research capabilities with over 400 investment professionals and research staff around the world. Our analysts carry out their research on the ground, and commission around 250 bespoke surveys or reports a year to understand the market potential of a company’s product and service innovations, in order to identify investment ideas.
M: Can you share some of your future business plans with us, such as the launch of new products?
T: One development that we are very excited about is that our wholly foreign owned enterprise (WFOE) in Shanghai was recently the first global asset manager to register with AMAC as a private fund manager. Over time, this will allow us to offer onshore managed products to domestic high net worth and institutional investors in China.
Solutions are also a focus for us. Fund investors are no longer looking for a product but an outcome-oriented solutions - be it income generation, low volatility, growth, etc.
M: Are there plans to further strengthen your investment team? In which areas?
T: Currently, we have around 120 portfolio managers and 200 analysts in 16 markets globally. We are constantly looking at ways to strengthen our investment team. As various parts of the business grow and new opportunities for alpha become apparent, we add to or adjust our resources in various jurisdictions accordingly.
View all Morningstar Hong Kong Fund Awards 2017 articles here.