Fidelity Asia Pacific Opps E-Acc-EUR |



by Claire Liang

Fidelity Asia Pacific Opportunities benefits from a savvy investor backed by deep analytical resources and a well-executed, high-conviction approach. We reiterate the strategy’s High People rating and Above Average Process rating. Morningstar has enhanced the way we assess alpha opportunity for funds, which is a key component in our Morningstar Medalist Rating calculation. More of this strategy's Medalist Ratings than usual may therefore change with this update even in the absence of changes to pillar ratings or fund costs. Portfolio manager Anthony Srom has led this strategy since June 2014. This expert investor started his investment career in 1997 and has delivered commendable track records across his strategies. He has consistently showcased a firm grasp of his portfolio holdings during our meetings, notably a keen awareness of the market perceptions surrounding these stocks. His edge also comes from his sell discipline and the great attention he pays to overall portfolio risks, which we think are crucial for this concentrated and contrarian offering. After being relatively stable between 2020 and 2023, the supporting Asia Pacific ex-Japan analyst team experienced elevated turnover from January to September 2024. This was partly triggered by the team’s performance evaluations, which were conducted this year amid Fidelity’s firmwide cost-cutting initiatives. While the team’s stability bears watching, it remains one of the largest in the region, with nearly 50 analysts as of September 2024. We also take comfort in Srom’s hands-on approach and concentrated portfolio, which should help mitigate the impact of analyst turnover. Srom adopts a bottom-up approach that is high-conviction and contrarian-oriented. Company fundamentals, market sentiment, and valuation are the three major tenets that Srom focuses on in assessing prospective holdings. Although there is no deliberate style bias, he prefers established companies with strong balance sheets that are oversold but present longer-term opportunities. As such, the end portfolio of 25-35 names often reflects a quality bias and a moderate growth orientation compared with the Morningstar APAC ex Japan Target Market Exposure Index Morningstar Category benchmark. To manage the risks of this very concentrated portfolio, Srom considers intrastock correlations in determining which stocks go into the portfolio and their position sizes, and he prefers stocks that are lowly correlated to one another. This bottom-up approach is distinctive and carries a high alpha potential, though it relies heavily on Srom’s judgment and execution. The portfolio’s concentrated and benchmark-agnostic nature means performance can substantially deviate from the index. Nonetheless, despite some setbacks in 2022 and year-to-date through November 2024, long-term performance has been strong during Srom’s tenure. |
Morningstar Pillars | |
People | High |
Parent | Above Average |
Process | Above Average |
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