Fidelity suspends two portfolio managers

Fidelity International is investigating whether two of its most experienced fund managers in Hong Kong breached internal codes of conduct.

Fidelity International in Hong Kong has suspended two of its portfolio managers over a possible breach of its internal code.

The suspensions were meted out last Monday, January 18, and local regulators and legal authorities were notified. Fidelity is now conducting an internal investigation of the alleged breach.

A Fidelity spokeswoman would not confirm who has been suspended, but she did confirm that two suspensions of portfolio managers have taken place.

According to a client of Fidelity that was notified of the suspensions, the firm's investigation centres on Kevin Chang and Wilson Wong. Both are veteran fund managers with Fidelity, each having worked at the firm in Hong Kong for nearly 14 years. Both worked their way up the corporate ladder from research analyst roles to run funds with sector specialisations.

Chang is responsible for Fidelity's South East Asia Fund and also runs several institutional portfolios, mostly for Asian clients. Wong is a portfolio manager on one of the retail Greater China strategies.

"We have extremely strict internal-compliance procedures and treat any possible breach very seriously," says the spokeswoman, Megan Aiken. "Their funds have been reassigned to other appropriately experienced managers within the Asia-Pacific team and our clients have been informed."

One of Fidelity's clients tells AsianInvestor that Chang has an excellent reputation and has delivered consistently good returns.

The portfolios managed by Chang and Wong have already been handed over to three members of Fidelity's Asia-Pacific equity team. The managers who are stepping in to manage their portfolios in the interim include: Martha Wong, portfolio manager for China equities; Stephen Ma, portfolio manager on a Taiwan fund; and Joseph Tse, a 20-year veteran best known for working on the Asian Special Situations Fund.

According to data on Bloomberg, Kevin Chang is involved in managing the following portfolios:

Fidelity Institutional Funds ICVC - South East Asia (registered in the United Kingdom)
Fidelity Advisor Emerging Asia Fund (United States)
Fidelity Global Investment Asia Pacific Equity Fund (China)
Fidelity Funds - Institutional Asia Pacific Ex-Japan Fund (Luxembourg)
Fidelity Advantage Portfolio - Asia Pacific Equity (Bermuda)
Fidelity Retirement Master Trust - Asia Pacific Equity (Hong Kong)
Fidelity Global Investment - Asia Pacific Equity Fund (Hong Kong)
Wilson Wong manages the following strategies:

Fidelity China Region Fund (United States)
Fidelity Funds - Greater China Fund (Luxembourg)
Fidelity Global Investment - Hong Kong Equity Fund (China)
Fidelity Retirement Master Trust - Hong Kong Equity Fund (China)
Fidelity Asia Equity Fund (Japan)
Fidelity Advantage Portfolio - Hong Kong Equity (Hong Kong)
Fidelity Funds - China Opportunities Fund (Luxembourg)

Neither Asia-Pacific chief investment officer John Ford nor incoming Asia-Pacific chief executive Arne Lindman was made available for comment. Lindman will not be on board at Fidelity until April 1.

When Lindman joins, he and Ford will have to address other issues, including finding a head of institutional investment, and a local CEO for Taiwan.

The institutional position has been vacant since Anthony Ho departed for China Asset Management; Conrad Cheng had joined Fidelity in August in that position, but left at the end of 2009, to become CIO at Lippo Investments Management.

The Taiwan role has been vacant for nearly two years.

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