Approaching emerging markets: A regional Asia focus, or a broader reach?

For active managers, this presents fertile ground for alpha. But advisers must decide whether that alpha is best accessed through a regionally focused manager with deep local insight, or a broader EM strategy that balances selectivity with flexibility across geographies.

This article compares two randomly selected fundamentally active approaches: Man GLG Asia Opportunities, which targets Asia ex-Japan, and the Fidelity Global Emerging Markets Fund, which invests across the entire EM universe.

Man GLG Asia opportunities: Earnings revisions as a core signal

Man GLG builds its strategy around the principle that earnings revisions are a persistent driver of equity returns in Asia. The team seeks companies undergoing fundamental change that will likely result in upward revisions to earnings forecasts over the next 12 to 18 months. These inflection points are often under-appreciated by the market and not yet priced-in.

The process is bottom-up, fundamental and research-intensive. The team analyses revenue dynamics, cost structures, margins and free cash flow, trying to identify companies where the consensus outlook is too conservative. The resulting portfolio holds 35 to 45 stocks, with a preference for mid-caps, selected from a universe of approximately 1,200 names.

Importantly, the strategy is not constrained by sector, style or country weights. Country and industry allocations are a consequence of stock selection rather than a top-down view. This allows the fund to remain flexible while maintaining alignment with its central research signal.

Fidelity Global Emerging Markets Fund: Quality at a global scale

Fidelity’s strategy is grounded in fundamental stock-picking across the full emerging markets universe. The investment process focuses on identifying high-quality businesses with strong balance sheets, sustainable cash flows, capable management teams and attractive reinvestment opportunities.

The team prioritises bottom-up research and seeks to build a portfolio of durable, long-term compounders. Governance quality and capital discipline are central to the assessment framework. While the strategy has the freedom to invest across sectors, styles and countries, it consistently demonstrates a bias toward ‘quality-growth’ companies and aims to avoid businesses with binary risk, weak controls or aggressive financial engineering.

The fund’s flexibility to allocate capital across regions allows it to diversify risk. That said, the portfolio does not depend on aggressive country rotation. Position-sizing and risk are primarily driven by conviction in individual company fundamentals rather than broad macro views.

Comparing focus and flexibility

The key difference between these two strategies lies in their structural scope. Man GLG is regionally concentrated but sharply focused. Its strength is in capturing fundamental change early, using a disciplined earnings revision framework. Fidelity is broader in geography but similarly grounded in company-level research, favouring quality and governance over valuation recovery or macro themes.

For allocators seeking targeted exposure to Asia’s inefficiencies, Man GLG offers a pure expression of regional alpha. For those building a core emerging markets allocation, Fidelity provides cross-regional diversification without compromising on research depth or investment discipline.

Their differences reflect a trade-off between precision and flexibility, and each can serve a distinct role within a broader portfolio.

Performance (per cent)

Man GLG Asia has outperformed over the short term, returning 25.3 per cent over one year compared to 14.9 per cent from Fidelity Global Emerging Markets. Its strong 3- and 6-month numbers reflect successful stock selection within Asia, particularly in mid-caps with earnings momentum. However, Man GLG’s performance record remains short. Fidelity, while lagging recently, shows more consistent long-term results, delivering 8.1 per cent annualised over ten years. The contrast highlights Man GLG’s tactical success versus Fidelity’s longer-term resilience.

Conclusion

Man GLG provides focused access to Asia’s most inefficient markets through a process grounded in local knowledge. Fidelity, on the other hand, is designed for allocators seeking a more comprehensive emerging markets exposure.

For many portfolios, the answer may not be one or the other. A combination of the two, with Fidelity as a core EM holding and Man GLG as a satellite for targeted Asian alpha, could offer a more complete solution. This pairing would capture both the depth of local knowledge and the breadth of global opportunity, aligning with long-term capital growth and diversification goals across the full spectrum of emerging markets.

Nick Hatzis

Nick is a columnist for The Inside Adviser and an expert on research and portfolio construction.