Fidelity Emerging Markets (FEML ) has launched a share buy-back programme to counter the double-digit discount on its stock ahead of an annual general meeting next month.

Shares in the £633m trust, which Fidelity’s Nick Price and Chris Tennant took over from Genesis two years ago, have been trading about 15% below net asset value (NAV), reducing its market value to £540m.

This is wider than the average 10.5% discount of trusts in the Association of Investment Companies (AIC) Global Emerging Market sector.

In a stock exchange announcement on Monday, the company said it had instructed its brokers Jefferies and JP Morgan Cazenove to begin buybacks from today until its AGM on 7 December, when it will ask shareholders to renew its annual buyback authority. 

It did not say how many shares would be bought or its target for narrowing the discount which has held back shareholder returns.

In a rising market, the shares firmed 3.2p, or 0.5%, to 596p.

Peel Hunt analyst Markuz Jaffe noted that the company had a performance-related tender offer in place which means it will have to buy back up to 25% of its shares if growth in underlying NAV does not beat the MSCI Emerging Market index in the five years to 30 September 2026.

Jaffe said that while the trust is ‘only just over two years into the performance measurement period’ he estimates it to be 15% behind and added the company will also face a continuation vote in 2026.

Over five years the company has had total underlying returns of 3.9%, with shareholders seeing a 3.6% uplift, while the MSCI Emerging Markets index is up 17.3%, according to Numis, reflecting the writedown of its investments in Russia last year.

According to Refinitiv data, more than 40% of the shares are held by value investors such as City of London Investment Management who will press the board for measures to reduce the discount and improve shareholder returns.

In the annual report this month, chair Heather Manners said the board had ‘focused hard’ on building up FEML’s portfolio and they ‘expect this to have a positive effect, over time, on both the shareholder register and the discount’.

In the company’s latest factsheet for September, the managers said its short positions in a Brazilian retailer, an Asian battery manufacturer and a North American silver miner had aided performance. However, its exposure to the financial sector, particularly Greek banks and Hong Kong-based insurer AIA Group, weighed on performance.