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What’s Hindered FSEAX’s Rise Year-to-Date in 2016?

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Performance evaluation of the Fidelity Emerging Asia Fund

The Fidelity Emerging Asia Fund (FSEAX) has emerged as a below-average performer among the nine funds in this review YTD (year-to-date) in 2016. It placed sixth in its peer group of nine. Meanwhile, in the one-year period ended June 24, 2016, the fund placed seventh.

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 has contributed to its below-average performance YTD.

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Portfolio composition and contribution to returns

The financials sector has dragged on FSEAX the most YTD. China’s Ping An Insurance Company has been the fund’s biggest negative contributor. Other negative contributors include Cathay Financial Holding, ICICI Bank (IBN), and China Pacific Insurance. India’s Yes Bank has been the sole major positive contributor. Meanwhile, CK Hutchison Holdings has led industrials down.

Information technology has been crucial in reducing the negative performance of FSEAX. Taiwan Semiconductor Manufacturing Company (TSM) and Tencent Holdings (TCEHY) have helped the technology sector. Meanwhile, Lenovo Group (LNVGF) and 58.com (WUBA) have been among the sector’s major negative contributors. CNOOC (CEO) and China Petroleum & Chemical (SNP) have powered the energy sector.

Investor takeaways

FSEAX is well diversified across stocks. However, its performance is below par, given its peer group. It has fallen by less than the passively managed AAXJ in terms of returns YTD in 2016. However, several actively managed funds have delivered better returns.

The fund can be considered for investment if you intend to spread your money across a basket of funds from the region. However, if you’re looking at two or three funds at the most, you may want to look at others before considering FSEAX.

Let’s move on to the Goldman Sachs Asia Equity Fund Class A (GSAGX).

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