Fidelity switches benchmark on Weir’s EMD fund

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Fidelity has moved to a shorter-duration benchmark on its emerging market inflation linked bond fund to protect investors from future interest rate rises.

The £202.9m Fidelity Emerging Markets Inflation Linked Bond fund, which is managed by Andy Weir, has been benchmarked against the Barclays Emerging Market Tradable Inflation Linked Short Maturity Index since 7 June 2013.

Previously, the portfolio used the Barclays Emerging Market Tradable Inflation Linked Index as its benchmark. The move has seen the fund’s duration fall from about eight years to its current three.

Fidelity says: “Fidelity’s fixed income team believes that interest rates and bond yields are at or close to a secular low point.

“Therefore, the reduction in the level of interest rate risk is to protect fund investors from the worst effects of any future rate moves while still maintaining a reasonable fund yield.”

Duration is the measure of a bond price’s sensitivity to a change in interest rates. The lower the duration, the less sensitive a bond is to movements in interest rates.