The Fidelity Emerging Markets trust has seen a steep decline in the last year, losing 30% in share price total return, and 27.9% of net asset value.

In the trust's annual results for the year ended 30 June 2022, chair Hélène Ploix said that while there had been multiple factors for the poor performance of the portfolio, "the most significant of these was doubtless Russia's invasion of Ukraine".

The trust has an overweight position in Russia prior to the invasion, an event the chair had "not been anticipated".

She commented that this overweight was slightly offset by the use of a hedging index short position immediately prior to the invasion, but added that this did not fully neutralise the over weights once the invasion began.

Following the sanctions placed on Russia by western governments, the trust's manager decided to write the valuation of the Russian securities down to zero, which led to a large negative impact to the valuation of the entire portfolio.

Ploix explained that the Russian invasion had also led to further problems for the trust, such as a steep re-rating of oil-rich markets such as Saudi Arabia, where the trust has been underweight, causing greater relative underperformance compared to the index.

Looking forward, Ploix said that despite uncertainty in emerging markets, "there are reasons for optimism", arguing that inflation will be less severe in many emerging markets and the focus on renewables will increase demand for commodities.

The trust's manager, Nick Price, added that since the Russian invasion, it has increased positions in areas such as Brazil and the Middle East, focusing on commodity exporting countries.

Meanwhile, it has avoided areas of the Chinese market as geopolitical tensions with the USA have grown.

Nevertheless, Price said he still sees value in certain sectors in China, such as certain stronger property developers who can benefit from the poor performance of the sector as a whole, and internet companies, which are comparably cheap.

According to current data from Association of Investment Companies the trust is on a 16.6% discount and has zero percent gearing.