Despite Downgrade, Emerging-Markets Debt Fund Still Solid

Alfonzo Bruno: Make no mistake, the pending retirement of John Carlson at Fidelity Investments at the end of 2019 is a notable loss. After roughly 25 years of leading Fidelity New Markets Income, he will be passing the reins to comanagers John Kelly and Tim Gill, though this duo is far from inexperienced. Kelly has worked alongside Carlson and for Fidelity’s emerging-markets team for over two decades, while Gill has worked in the same capacity for just over 10 years. The duo will continue to be supported by Fidelity’s adept emerging-markets resources, as well as the firm’s bench of traders, risk specialists, and quant tools.

While material overall, the change at the helm of the strategy should have minimal impact on the investment process. The strategy’s hard-currency makeup gives the fund a slightly conservative stance compared with rivals that take on more emerging-markets currency risk. That said, the managers are willing to take on plenty of credit exposure if they think the price is right. As a result, investors have been well served as the fund has remained one of the category’s top performers over the long term.

Despite the resulting downgrade from Silver to Bronze given the announced retirement, we believe it remains a solid choice for investors looking for dollar-denominated emerging-markets bond exposure.