Genesis Emerging Market Fund proposes to switch to Fidelity for management
The board of directors of Genesis Emerging Markets Fund Ltd. intends to appoint Fidelity International as investment manager, replacing Genesis Investment Management, holder for 30 years.
The board of directors of the £ 1.2bn ($ 1.7bn) GEMF – a closed-end investment fund – also wants to update the investment policy to allow investment in a diversified portfolio of equities, equity-related securities and derivative instruments, giving exposure to certain companies in emerging markets, according to a regulatory file. Under the proposal, the name of the company would be changed to Fidelity Emerging Markets Ltd. Changes are subject to shareholder and regulatory approvals.
The company’s board of directors said the shareholder benefits of the changes include access to Fidelity’s emerging markets strategy and will result in a significant reduction in management fees.
Fidelity has also agreed to devote “significant marketing resources to promoting the company,” the file said.
“After a thorough review of its investment management arrangements and after reviewing a range of strong candidates through a competitive process, it was clear to the Board of Directors that Fidelity has deep expertise in emerging markets and the management of investment trusts, and that the Company would also benefit significantly from the Fidelity brand and its ability to attract new shareholders through its significant marketing resources, ”said Helene Ploix, President of Genesis Emerging Markets Fund Ltd. , in the file.
Fidelity would replace Genesis Investment Management, which has been managing the assets for over 30 years. “After lengthy discussions with Genesis, the Board of Directors fully understands and appreciates Genesis’ emphasis on its institutional mandates,” the file states.
Fidelity had $ 740 billion in assets under management as of March 31.
In a statement provided by a spokesperson, Genesis Investment Management said the use of derivatives and short sales – as proposed by the board of directors under contract with Fidelity – “is a change important and not a change that Genesis would like to reproduce “.
The press release acknowledges that Genesis has a strong position in the institutional market and is committed to adopting a unique investment strategy. “Genesis’ emphasis on prioritizing investment performance and its cautious approach to capacity management does not fit well with the board’s desire to refocus GEMF to more openly target retail investors,” said the communicated.
The changes will be submitted to shareholders at an extraordinary general meeting in August.