What’s Driven FEAAX Down Year-to-Date in 2016?

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Performance evaluation of the Fidelity Advisor Emerging Asia Fund

The Fidelity Advisor Emerging Asia Fund Class A (FEAAX) has emerged as a below-average performer among the nine funds in this review YTD (year-to-date) in 2016. It has placed third last in its peer group. Meanwhile, in the one-year period ended June 24, 2016, the fund placed second last.

We’ve graphed the fund’s performance against the iShares MSCI All Country Asia ex Japan ETF (AAXJ) and the WisdomTree Asia Pacific ex-Japan ETF (AXJL).

Let’s look at what’s contributed to the fund’s below-average performance in 2016.

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Portfolio composition and contribution to returns

The financials sector has hurt FEAAX the most YTD. China’s Ping An Insurance Company has been its biggest negative contributor. Other negative contributors include Shinhan Financial Group Company (SHG) and China Pacific Insurance.

India’s Yes Bank has been the sole major positive contributor to the sector. Meanwhile, CK Hutchison Holdings has led industrials down. JD.com (JD) and Ctrip.com International (CTRP), among several others, have been responsible for the negative contributions from the consumer discretionary sector.

Information technology has been crucial in reducing the negative performance of FEAAX. Taiwan Semiconductor Manufacturing Company (TSM) and Tencent Holdings (TCEHY) have helped the technology sector. Meanwhile, Lenovo Group (LNVGY) and 58.com (WUBA) are among the sector’s major negative contributors.

Investor takeaway

FEAAX hasn’t done well YTD, even though it’s beaten the passively managed AAXJ in terms of returns.

The fund’s portfolio turnover is on the higher side. Due to this, investors should consider the investment horizon and see whether the fund has been able to navigate challenging markets in the past. Given its company, there are several other funds that could be considered in place of FEAAX at this point of time.

Let’s move on to the Fidelity Emerging Asia Fund (FSEAX).

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