Fidelity Asian Values (FAS)

Managers Nitin Bajaj and Ajinkya Dhavale note the Portfolio of Fidelity Asian Values (FAS) is currently at its most extreme positioning in terms of valuation and quality versus its benchmark in their tenure. This is largely a result of their highly disciplined, bottom-up approach, which the managers simplify as looking for good businesses, run by good people and at a price that offers a margin of safety amongst their universe of Asian smaller companies. Recently, this approach has identified a broad range of opportunities within the Indonesian market, which has derated due to broader macro issues, leading to several mis-priced opportunities. By contrast, the rally in the wider region, driven in part by technology, has led to the managers rotating out of several holdings, notably in China, into better value ideas.

The broad rally in the region has been beneficial to absolute Performance though, with the managers also outperforming in this environment thanks to their strong stock selection. The underweight in India has also contributed, as well as the sizeable allocation to Chinese stocks. However, as a result of the strong market performance, the managers note valuations are elevated and have taken their short exposure to near its upper limit with the aim of generating alpha should these see a pullback (see Gearing).

The focus on cash generation when selecting stocks, as well as tweaks to the charging structure, have contributed to an increase in distributable revenue, enabling a sizeable increase in the Dividend. The trust now yields c. 3.4%, considerably more than the index, which is supported by sizeable revenue reserves.