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Get Emerging-Markets Bond Exposure With Less Currency Risk

Silver-rated Fidelity New Markets Income takes a time-tested approach to investing primarily in dollar-denominated emerging-markets debt.

Karin Anderson: This week's Morningstar Medalist of the Week is Fidelity New Markets Income (FNMIX). It's a Silver-rated fund in our emerging-markets bond category.

It's managed by John Carlson, who has been running it since the mid-Nineties. We like the manager and his team. They've been working together for a long time--many of them since the mid-Nineties and through the evolution of the emerging-markets bond market. So, they have stayed pretty true to the core of their process in focusing on hard-currency emerging-markets debt. With that, they are investing in bonds that are denominated in dollars, so there really isn't so much foreign-currency risk here.

They do take pretty significant credit bets--some of those lately have been Venezuela and Russia--but over time they've really used that approach well and have added in some local-currency bonds as well as corporate bonds. They have done that very well and have a very good risk-adjusted track record versus similarly focused peers and also versus the benchmark.

Last of all, we like this fund because it has a reasonable price tag.

Karin Anderson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.