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Fidelity's Global Special Situations Fund: Unearthing Value in Emerging Markets

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  //stocks-investing.news-articles.net/content/202 .. s-fund-unearthing-value-in-emerging-markets.html
  Published in Stocks and Investing on Monday, January 5th 2026 at 13:26 GMT by This is Money

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Beyond the Headlines: Unearthing Value in Emerging Markets – A Look at Fidelity’s Global Special Situations Fund

For many investors, the allure of high-growth markets like the US has dominated recent years. However, as valuations become stretched and geopolitical uncertainties loom, a growing number are looking elsewhere for opportunities. The This is Money article "The cheap shares in the world's overlooked market" highlights the potential – and inherent risks – of investing in emerging markets, specifically through Fidelity’s Global Special Situations Fund (FSUS). The piece argues that these often-overlooked regions offer a compelling case for value investors seeking long-term growth at reasonable prices.

The Case for Emerging Markets: A Value Opportunity

The article's central thesis revolves around the concept of "value investing" – identifying companies trading below their intrinsic worth, with the expectation they will eventually be recognized by the market and reprice upwards. Emerging markets, often buffeted by negative headlines (political instability, currency fluctuations, regulatory changes), frequently become undervalued as a result. This creates an opportunity for patient investors willing to weather short-term volatility.

The article points out that developed markets are increasingly expensive. US equities, in particular, have seen significant price appreciation, leaving less room for future growth and increasing the risk of correction. Emerging markets, conversely, often trade at lower Price-to-Earnings (P/E) ratios, Price-to-Book (P/B) ratios, and offer higher dividend yields – all indicators suggesting potential undervaluation.

Fidelity’s Global Special Situations Fund: A Specialist Approach

The article focuses on Fidelity's Global Special Situations Fund as a vehicle for accessing this opportunity. Managed by Dominic Gammon, the fund takes a highly active approach, focusing on companies facing temporary difficulties or undergoing significant change – situations that often lead to undervaluation. Gammon’s strategy isn't simply about buying shares in emerging markets; it's about identifying specific companies within those markets that are mispriced due to these special circumstances.

The fund’s investment universe is broad, encompassing a wide range of emerging market countries including China, India, Brazil, and Russia (although the article acknowledges current sanctions impacting Russian holdings). Gammon emphasizes bottom-up research, meaning he focuses on individual company fundamentals rather than macroeconomic trends. He looks for companies with strong balance sheets, capable management teams, and sustainable competitive advantages – even if they are currently facing challenges.

Key Holdings & Investment Themes

The article details some of the fund’s key holdings, illustrating Gammon's investment philosophy. These include:

• Taiwan Semiconductor Manufacturing Company (TSMC): A dominant player in semiconductor manufacturing, TSMC has faced geopolitical headwinds but remains a crucial supplier to the global technology industry.
• Samsung Electronics: Another tech giant facing cyclical challenges and regulatory scrutiny, offering potential value for long-term investors.
• Reliance Industries: An Indian conglomerate with interests spanning energy, telecommunications, and retail, benefiting from India’s rapid economic growth.

The fund's investment themes reflect broader trends in emerging markets: the rise of the middle class, increasing urbanization, digitalization, and a growing demand for consumer goods and services. Gammon believes these trends will continue to drive long-term growth in these regions.

Risks & Considerations – A Word of Caution

While the potential rewards are significant, investing in emerging markets is not without risk. The article doesn't shy away from highlighting these challenges:

• Political Instability: Emerging market countries often face greater political risks than developed nations, which can impact investor sentiment and company performance.
• Currency Fluctuations: Emerging market currencies are typically more volatile than those of developed economies, potentially eroding returns for foreign investors.
• Regulatory Uncertainty: Regulatory environments in emerging markets can be less transparent and predictable, creating uncertainty for businesses.
• Liquidity Risk: Some emerging market stocks may have lower trading volumes, making it difficult to buy or sell shares quickly at desired prices.
• Geopolitical Risks: As highlighted by the ongoing conflict in Ukraine, geopolitical events can significantly impact specific markets and investment strategies. The article notes that while FSUS has reduced its exposure to Russia, some holdings remain impacted.

The article also mentions the fund’s performance. While it has historically outperformed benchmarks over longer periods, recent years have seen underperformance due to various factors including China's regulatory crackdown and global economic headwinds. This underscores the importance of a long-term investment horizon when investing in emerging markets.

Fund Details & Performance (as of article publication)

The article provides key details about the Fidelity Global Special Situations Fund:

• Charges: The fund has an ongoing charge of 0.87%
• Yield: A dividend yield of around 2.5%.
• Performance: While past performance isn't indicative of future results, the article highlights its long-term track record and resilience through various market cycles.

Conclusion: A Contrarian Opportunity?

The This is Money article presents a compelling case for considering emerging markets as part of a diversified investment portfolio. While risks are undeniable, the potential for value creation remains significant, particularly for investors with a long-term perspective and a tolerance for volatility. Fidelity’s Global Special Situations Fund, with its specialist management team and focus on undervalued companies, offers a potentially attractive way to tap into this opportunity – but requires careful consideration of the inherent risks involved. The article serves as a reminder that sometimes, the best investment opportunities lie in the markets often overlooked by the mainstream.

Disclaimer: I am an AI chatbot and cannot provide financial advice. This summary is for informational purposes only and should not be considered a recommendation to buy or sell any securities.