Why We Upgraded This Fidelity Emerging-Markets Bond Fund

Fidelity New Markets Income’s FNMIX strong track record and repeatable process helped it earn People and Process upgrades to Above Average from Average, lifting its Morningstar Medalist Rating to Bronze from Neutral in September.

Tim Gill and Nader Nazmi took the reins here in 2020, and their eclectic backgrounds help them navigate a wide range of markets. Gill’s more than two decades of experience includes running several emerging-markets strategies, and Nazmi’s background includes a decade as a sovereign economist focused on Latin America.

The managers have built a more structured and repeatable process since they took over. They have refined the process by introducing stricter limits on position sizes and ensuring that the fund’s duration, which is a measure of interest-rate sensitivity, remains within 20% of its JPMorgan EMBI Global Diversified Index; previously, it had drifted as far as 40%. They also occasionally utilize US Treasury futures or index-linked credit default swaps for risk management.

Key Morningstar Metrics for Fidelity New Markets Income

• Morningstar Medalist Rating: Bronze
• Process Pillar: Above Average
• People Pillar: Above Average
• Parent Pillar: Above Average

A Strong Team With Consistent Execution

BNY Mellon Global Fixed Income SDGIX team’s enhanced research capability and consistent execution bolstered our confidence in the strategy and earned it People and Process ratings upgrades to Above Average from Average and a Medalist Rating upgrade to Bronze from Neutral for its I shares last month.

A decent team backs up Brendan Murphy, who has run this fund since 2017. The squad, which includes comanagers Scott Zaleski, Nathaniel Hyde, and relative newcomers Adam Whiteley and Harvey Bradley, has stabilized after a history of turnover. BNY Investments’ decision to give its subsidiary Insight Investment Management control of its fixed-income strategies in 2021 increased support from specialized sector teams, enhancing the strategy’s research capability.

The managers blend top-down perspectives with bottom-up research while maintaining a risk-conscious approach. They select top ideas from nearly 100 fixed-income professionals, focusing on securities that align with the strategy’s objectives. Although historically adventurous with currencies and emerging markets, the managers have scaled back currency allocations in recent years to help reduce volatility.

Key Morningstar Metrics for BNY Mellon Global Fixed Income

• Morningstar Medalist Rating: Bronze
• Process Pillar: Above Average
• People Pillar: Above Average
• Parent Pillar: Average

A Veteran Technology Investor

Our confidence in Fidelity Select Technology’s FSPTX manager has increased, earning it a People rating upgrade to Above Average from Average, which increased its Medalist Rating to Bronze from Neutral.

Manager Adam Benjamin has run this fund since 2020, which is a long time for a Fidelity sector fund. Manager turnover is not unusual at the family’s more narrowly focused strategies, and prior to Benjamin’s arrival, this fund was no different. Benjamin, however, arrived with extensive experience running the technology sector sleeves of Fidelity institutional separate accounts and as a technology hardware analyst and investment banker. He knows his sector well and performance has been decent since he arrived.

Key Morningstar Metrics for Fidelity Select Technology

• Morningstar Medalist Rating: Bronze
• Process Pillar: Average
• People Pillar: Above Average
• Parent Pillar: Above Average