Complete your registration today for a chance to win £50 John Lewis vouchers in our weekly draw Enter now
Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Fidelity Asian Values. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
FAS has a highly differentiated profile: small-cap Asian value with a significant China exposure…
Overview

Fidelity Asia Values (FAS) is managed by Nitin Bajaj who takes a value-orientated approach to building a portfolio of predominantly small-cap companies from across the Asian region. This approach is supported by a simple philosophy of identifying good companies that are run by strong management teams and buying them at an attractive price. Nitin has significant flexibility in where he can invest, including the ability to invest up to 20% in larger companies and Australian-listed businesses which, when combined with the valuation-driven approach, can lead to a Portfolio that is highly differentiated from both the benchmark and peer group.

Stock selection is designed to be the primary driver behind Performance. Nitin utilises the strength and depth of the on-the-ground analyst team at Fidelity to try to build an informational edge over the market and find value in companies that others overlook. The valuation focus has also led to Nitin finding a number of opportunities in China which is now at its largest overweight allocation in his tenure. He believes these deep-value opportunities offer significant upside if sentiment improves, as well as downside protection through deeply depressed valuations.

In order to capitalise on this value opportunity, the manager has increased the net exposure on the trust to 3.3%. Fidelity’s house style is to use derivatives instead of traditional Gearing facilities, which also allows Nitin to take short positions in stocks and benefit from a potential fall in value.

FAS continues to trade at a Discount to NAV. The level of discount is almost as wide as its nadir in mid-2023 at 9.7%.

Analyst's View

We believe FAS offers investors exposure to the Asian region that is not matched elsewhere (see Portfolio). Being a small-cap trust with a value-driven process is enough to differentiate the vehicle, but when combined with Nitin’s flexibility to go anywhere, taking off-benchmark positions and shorting stocks means that FAS can be seen as a highly complementary trust to hold alongside a larger-cap peer, or even as a diversifier within a portfolio.

Currently, we think Nitin’s significant overweight to China offers differentiation to peers, many of whom are underweight the country. As we have discussed in Performance, Nitin believes this is an attractive valuation opportunity, offering considerable upside and a margin of safety on the downside. This positioning is further enhanced by the trust’s Gearing. Nitin significantly increased FAS’ level of net exposure at the beginning of 2023, and it remains notably higher than the average of the past five years. Should there be a market recovery in 2024, we expect the gearing to considerably increase the trust’s upside potential.

FAS currently trades at a Discount to NAV that is in line with the five-year average. The discount has proved volatile in the past few years, though the shares did trade close to NAV in mid-2023 due to ultimately misplaced optimism surrounding China’s re-opening. As such, we believe any further volatility could prove an attractive entry point for long-term investors, and the current level could easily narrow if the unique positioning proves prescient.

Bull

  • Value approach offers differentiated and complementary exposure to the region
  • Portfolio generates highest yield in peer group, despite dividends not being a primary focus
  • Portfolio is trading at low valuations but in line for quality metrics

Bear

  • Stock selection focus can lead to a very different profile to benchmark
  • Increased gearing can amplify losses as well as potential upside
  • Significant allocation to China would be exposed to further weakness in the country
Continue to Portfolio

Welcome to Kepler Trust Intelligence

Please enter a valid email address
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid email address
{{item.msg}}
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
To ensure that we are able to provide content which is appropriate for you, please tell us a little about yourself.
Please choose an option
{{item.msg}}
Please enter a company name
{{item.msg}}
Please enter a location name
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a platform
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a trust
{{item.msg}}
?
The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
Please confirm
{{item.msg}}
Please select an option
{{item.msg}}
See benefits
A free Kepler Trust Intelligence account allows you to access premium content including the ‘Kepler View’ – our verdict on the trusts we cover – and historical research so you can see how our view has changed over time. An account also unlocks useful facilities like the ‘follow’ button which lets you keep track of the trusts you’re interested in and as a logged in user you can also download PDFs of our research, and choose the layout of the page you’re reading to suit your preference. We will not share your details unless you give us permission to do so, and we won’t bombard you with emails – we only send one a week.
Please select an option
{{item.msg}}
Please enter your first name
{{item.msg}}
Please enter your last name
{{item.msg}}
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid password
{{item.msg}}
How will this information be used? Your answers help us to tailor our content to relevant investment trusts, and to ensure that the asset allocation and portfolio strategy research we produce is appropriate to our userbase.
Our Website uses Cookies Cookies are small text files held on your computer. They allow us to give you the best browsing experience possible and mean we can understand how you use our site. Some cookies have already been set. You can delete and block cookies, but parts of our site won’t work without them. By using our website you accept our use of cookies. For further information please refer to the Kepler Privacy Notice.
Need help?

One more thing...

Did you know, you can 'follow' individual trusts on Kepler Trust Intelligence? Use the functions below to set up alerts and we'll send you research and updates on your chosen trusts.

Suggested trusts to follow

Browse all funds
Need help?
Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.