ASIA PACIFIC EX JAPAN
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This is for investment professionals only and should not be relied upon by private investors.
The value of investments can go down as well as up so the client may get back less than they invest. Past performance is not a reliable indicator of future returns. The Fidelity funds featured in this publication invest in overseas markets which means their value can be affected by changes in currency exchange rates. Some funds invest in a relatively small number of companies and, therefore, may carry more risk than funds that are more diversified. The funds may also use financial derivative instruments for investment purposes, which may expose the fund to a higher degree of risk and can cause investments to experience larger than average price fluctuations. Investments in Fidelity funds should be made on the basis of the current prospectus, which is available along with the Key Investor Information Document, current annual and semi-annual reports free of charge on request by calling 0800 368 1732. Issued by Financial Administration Services Limited and FIL Pensions Management, authorised and regulated by the Financial Conduct Authority. Fidelity, Fidelity International, the Fidelity International logo and F symbols are trademarks of FIL Limited. UKM0220/26476/SSO/0620
IN PARTNERSHIP WITH
he “Asian century” is in full swing as the region resumes its age-old place at the centre of our economic world. Asia represents more than half the world’s population, most of the world’s megacities, and a rising proportion of global
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Asia – Still growing, still changing
“Urbanisation and the rising middle class across Asia is the secular growth story that is driving Asian consumption,” says Teera Chanpongsang of the Fidelity Asia Fund.
GDP – in stark contrast to Europe’s anaemic growth and projected fall in population over the next decade.
Yet investors are not finding it easy to focus on these fundamentals, given important but shorter-term issues such as the US/China trade disputes and the human tragedy of the coronavirus outbreak in early 2020. This guide uses an infographic to remind investors of Asia’s longer-term trajectory while Fidelity’s experts explore the changing structure of the regional economy.
Teera Chanpongsang looks at change underway inside the region including rising intra-regional trade, urbanisation and a growing middle class. Anthony Srom explains his approach to high-conviction investing in a focused selection of Asian companies. Nitin Bajaj then explores a value investor’s view of Asian opportunities and Hyomi Jie reminds us of a trend that is not going away: the growth of premium local brands in tune with China’s increasingly affluent consumers.
Can investors keep pace?
ver recent times, China has run into headwinds stemming from the US-China trade dispute, the level of domestic debt, concerns over a broader global economic slowdown, and the coronavirus outbreak in early 2020.
The mood had seemed to lighten at the start of 2020 as the US and China agreed a phase 1 trade deal. The agreement signed by US president Donald Trump and China’s vice premier Liu He does avert painful tariffs and while it is far from all-encompassing, it signals no major escalation for the time being. However, the rapid spread of the coronavirus in the early months of 2020 has introduced a new risk factor (see below).
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The drumbeat of day-to-day headlines threatens to drown out the longer-term story of growth across the wider Asia region. Teera Chanpongsang, manager of the £3.0bn Fidelity Asia Fund, says there are many new opportunities related to the rising middle class and their consumption of a range of goods and services. For those with longer investment horizons, could periods in which market valuations look attractive relative to developed markets like the US represent opportunities to initiate or increase exposure to Asia?
The trade disputes and the uncertainty these engendered have been felt worldwide and were a contributing factor in global central banks shifting towards a more accommodative stance over 2019 to support economic activity. The broader role that central banks have played in driving and facilitating the decade long US-led bull market should not be overlooked, although Paras Anand, Fidelity’s Head of Asset Management in Asia Pacific, wonders if “there is a risk that the returns to those areas that have been the greatest beneficiaries have largely played out.”
The global setting
If so, he says, the Asian markets might turn out to “offer good earnings growth at lower valuations relative to many developed markets.” Fidelity’s global earnings outlook paints a relatively robust picture of Asia earnings compared to other major equity market regions. Anand cautions investors to take care, however, as not all sectors in the region will reap the same benefits from growth: “In China, in particular, there could be weaker returns from the popular technology and consumer names and stronger performance from other sectors.”
Significant structural change is underway inside the region. “Intra-Asia demand now makes a significant contribution to domestic revenue generation,” says Teera Chanpongsang. Important in itself, this may mean any further trade issues have less impact on an increasingly domestically-driven regional economy.
Regional structural shifts
There are other fundamental long-term trends, as our infographic article explains. Asia’s population continues to grow, and now makes up nearly 60% of the world’s total population compared to Europe’s share of under 10%.(1) But it’s really the changing lifestyle of this growing population that is making waves, with Asia now claiming 26 of the world’s 40 megacities (over 10m people)(2) and contributing an ever greater share to the growing global middle class. “Urbanisation and the rising middle class across Asia is the secular growth story that is driving Asian consumption,” says Chanpongsang.
Rising consumption, in turn, is creating regional giants. Alibaba’s 2019 ‘Singles Day’ sales extravaganza broke records with $38.4bn sales(3) compared to $30.8bn last year – dwarfing similar events in the US and other developed economies. Fidelity’s experts think that one effect of the coronavirus tragedy may be to increase the penetration of online consumption still further, with online services such as e-tutoring, entertainment, and grocery delivery all receiving a forward push.
But the long-term Asia growth story has bigger, strategic implications for investors:
• First, Asia’s growth story should be driving a re-weighting of the Asia Pacific region within many investment portfolios. By 2040 Asia may drive 40% of global consumption, up from around 30% today.(4)
• Second, investors need to respond to the changing shape of the Asian economy, as new industries emerge and others increase in importance, helping to determine a new set of corporate winners and losers.
Investors can no longer simply hope to ride on the coat-tails of Asian economic growth – they need to increase their understanding of the market. Fidelity’s analysts, for example, are tracking the success of Asian firms that offer a local twist to products while charging a premium price (‘premiumisation’).
Chanpongsang has followed the dramatic rise of the region’s economy since joining Fidelity as an analyst in 1994, and says he has watched “beginners mature into market leaders”. This includes the rise of China’s largest cookware company, a winner in the market to supply camera modules for android phones, and a well-positioned airports operator. (Read the case studies here).
For Chanpongsang, geopolitical stresses are less important than this long-term picture of growth and change. “There is no going back on regional structural shifts that have already been set into motion,” he says.
As the region evolves, working out which businesses will be winners or losers takes feet on the ground. “Understanding the core of a business is a crucial and non-negotiable aspect of my investing discipline, as it helps me to find structural growth beyond cyclical swings in demand,” says Chanpongsang, who is part of Fidelity’s extensive Asia-based team.
Feet on the ground
He’s now following the emerging regional dynamics closely, looking for companies with experienced management teams that will benefit from “underlying structural growth prospects”. He maintains “a clear focus on domestic exposure to benefit from strong local demand” including “companies that benefit from the secular growth of e-consumption, a rising middle class and premiumisation.”
The short-term pressures however mean that he is also wary of investing in companies where he is not completely convinced by the management team or business model. “I also prefer companies that do not have high gearing or high debt,” he says.
The positive long-term structural trends are important but the risks need to be managed through understanding each company, emphasising the quality of the portfolio holdings, and making sure returns are sustainable, says Chanpongsang.
For investors, Asia continues to offer opportunity. But as the region evolves and its growth drivers shift, it demands local knowledge to identify the winners and avoid the losers.
Asia – Too big to ignore?
Fidelity International’s Teera Chanpongsang on how the next leg of Asia's multi-year growth story might unfold
“Chinese indebtedness remains a theme for global investors,” says Fidelity’s Paras Anand, “but it is important to contextualise the risk. While China's current account has moved from surplus to deficit, this reflects in part the changing shape of the Chinese economy from a heavy reliance on exports to a more balanced economy.” Meanwhile the risk is changing shape. “There is more debt at the household level as people have rushed to buy property,” Anand says, “but state-owned enterprises have been de-leveraging and policy measures have limited overall lending growth.”
China Debt – Time to set in context?
China’s headline growth figures have trailed off in recent years towards 6% per annum. But that seems to be partly because the Chinese economy is maturing: tilting away from dependence on manufactured exports and towards a more domestic consumption-led growth model, in which services play a larger part. Fast export-led growth may be turning into more sustainable regionally driven growth, at rates that still look attractive compared to developed economies.
China growth rates: A maturing economy?
The economic impact in China is expected to be significant in Q1 2020 as panic drives both investor and consumer behaviour. Given my experience with watching the impact of SARS unfold in the early 2000s, we saw that the market bottom coincided with the peak of the crisis.
The Fidelity Asia Fund has a clear orientation towards consumption and this near-term weakness will be felt in the short-term returns. However, it is less likely to disrupt the long-term structural change that is unfolding in China and in Asia. The Chinese stock market and Chinese economy are significantly deeper and wider than they were at the time of the SARS outbreak.
While China remains a key area of the portfolio, the underlying emphasis is still on capturing the long-term market penetration opportunity in Asia as demographics remain favourable and governments maintain a pro-reform approach.
The coronavirus: A longer-term perspective
Insight from Teera Chanpongsang
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Asia’s population continues to grow, making up nearly 60% of the world’s total population
Sources. (1) UN World Population Wallchart 2019 (2) GlobalData, February 2019 (3) Sherisse Pham, CNN Business, 12 November 2019 (4) McKinsey & Company, The Future of Asia, September 2019
Forward PE: Asia ex Japan Relative to Developed markets (Historical Example)
Source: Refinitiv DataStream, 31 December 2019
Ratios below 1.0 make Asia ex Japan appear relatively ‘cheaper’ than Developed Markets
Source: Fidelity International, as at November 2019. Please note that the earnings growth forecasts for Global and the US in 2019 are 0%.
Fidelity international earnings growth forecasts
Asia earnings outlook appears strong relative to many developed markets
Investments in Fidelity funds should be made on the basis of the current prospectus, which is available along with the Key Investor Information Document, current annual and semi-annual reports free of charge on request by calling 0800 368 1732. Issued by Financial Administration Services Limited and FIL Pensions Management, authorised and regulated by the Financial Conduct Authority. Fidelity, Fidelity International, the Fidelity International logo and F symbols are trademarks of FIL Limited. UKM0220/26476/SSO/0620
Important information
Past performance is not a reliable indicator of future returns. Note the views expressed may no longer be current and may have already been acted upon. Reference to specific securities should not be interpreted as a recommendation to buy or sell these securities but is included for the purposes of illustration only. The Fidelity Asia Fund can use financial derivatives which may expose it to a higher degree of risk and can cause investments to experience larger than average price fluctuations. Investments in small and emerging markets can be more volatile than other more developed markets. Investments in overseas markets may be subject to currency fluctuations.
Which Asia companies might weather macro storms?
Fidelity’s Anthony Srom explains why relative caution about China at the macro level won’t stop him pursuing a high-conviction investment strategy
From an investment perspective, I try to avoid the daily newsflow and instead focus on companies that can weather any storms ahead
So why am I excited for Yum China’s future? Because sentiment is negative, valuation supportive, and fundamentals can improve as we move through 2020. Starting with Pizza Hut, Yum China is adapting to local tastes and revamping their stores, which could turnaround that franchise. With regards to KFC, they have been able to lock in future chicken prices with suppliers due to their scale and re-working their menu to lessen cost pressures. In addition, KFC has been able to hike prices as the actual RMB hikes are quite small and people are willing to pay for convenience. Much of the negative sentiment is already priced in to current valuations, where even small improvements in Pizza Hut or KFC could see the stock rerate.
Managing for risk is important and given the concentrated nature of the portfolio I spend a lot of time looking at how stocks behave relative to each other, favouring stocks with relatively low levels of correlation. It is pleasing that we have managed to deliver the performance we have over the last five years with less volatility than the broader market.*
My approach is very much stock-specific, leveraging Fidelity’s large research network to find the best ideas across the region. The fund is a high conviction portfolio that runs between 25 and 35 names at any time. This concentrated approach means each stock can meaningfully contribute to performance and it also allows me more time to focus on each holding and the key drivers of returns: fundamentals, sentiment and valuations.
You’ve been managing the Fidelity Asia Pacific Opportunities Fund since September 2014. How do you run the portfolio and where has performance come from?
Our holdings in China have been contributors to this performance and we’ve had a material position in liquor maker Kweichow Moutai since the fund was launched. Chinese Soy sauce manufacturer Foshan Haitian Flavouring & Food has also been a standout performer and we’ve also had some success with selective holdings in Australia such as Sydney Airport, Charter Hall Group and Bellamy’s Australia.
While headline news is currently focused on the coronavirus outbreak, you may have also read that African Swine Flu has had a devastating impact on pig stock in China, slashing supply and causing pork prices to rise significantly. Consumers have taken to other sources of protein; thus we have seen chicken price increases too. KFC is the key cash generator for China's largest restaurant company Yum China, who have exclusive rights to operate and sub-license the KFC, Pizza Hut and Taco Bell brands in China. And 2019's rising chicken prices have increased costs, hurting its share price. Additionally, Pizza Hut has been in the doldrums in China.
Can you provide an example of how you’re taking advantage of any recent regional trends?
Trade war rhetoric has been a major driver of sentiment over the last 12 months. We’ve had both positive and negative newsflow and there now appears to be something of a truce following the phase one trade agreement in January. From an investment perspective, I try to avoid the daily newsflow and instead focus on companies that can weather any storms ahead. I think the US/China issue is here to stay as it is part of a longer-term strategic battle between the US and China.
What are your thoughts around the US-China trade war and how has that influenced portfolio positioning?
On top of that, there’s also a fight for liquidity globally and I don’t think China is winning. You can see that in money growth, FX reserve growth, slowing economic growth and so on. Trade is just one piece of the puzzle.
Despite being relatively cautious on China at a macro level, I’m still finding interesting stockpicking opportunities in the domestic A-share market. There are companies here that have great products, a clear market opportunity and solid balance sheets. However, investors need to be aware of potential governance issues and discount that in their investment thesis.
Within your portfolio where are your highest conviction ideas?
The Indian financials sector is also interesting. Last year’s liquidity crunch caused by the non-bank financial sector defaults pretty much halted wholesale funding and increased regulation. This has affected lending in India and the financial sector has faced significant headwinds. Sentiment remains negative, but we could be passed the worst, which may see valuations ‘mean revert’ over the course of 2020.
Anthony Srom
*Past performance is not a reliable indicator of future returns. View the fund range overview section for five-year performance data. Note the views expressed may no longer be current and may have already been acted upon. Reference to specific securities should not be interpreted as a recommendation to buy or sell these securities but is included for the purposes of illustration only. The Fidelity Asia Pacific Opportunities Fund can use financial derivatives which may expose it to a higher degree of risk and can cause investments to experience larger than average price fluctuations. This fund invests in a relatively small number of companies and so may carry more risk than funds that are more diversified. Investments in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can also be more volatile than other more developed markets.
The hunt for value in Asia
Fidelity’s Nitin Bajaj explains how he tries to spot valuation anomalies in Asian small-caps amid some interesting market dynamics
The ride might be bumpy but given the quality of the businesses we own, I feel confident about the destination
As a small-cap value investor, this has been a painful period but these trends between growth and value are part and parcel of investing in the stock market. They often capture the imagination of the media and investors before fading away. It is not possible to forecast the duration or magnitude of these swings but historically they always reverse.
We try to spend more time looking at companies rather than predicting changes in the macro environment. In this regard, we remain focused on finding good businesses, run by capable management and buying them at a good price. An attractive valuation is the starting point for everything I do as it is this that determines both the base for compounding capital returns as well as providing a margin of safety.
The positive news is that market movements create opportunities for us to add or initiate exposure to smaller companies where valuations have become disconnected from fundamentals. This is highlighted to good effect by the fact that Fidelity Asian Values PLC moved from a substantial cash position in 2018 to a small amount of leverage by the end of 2019.
At an overall level, the aggregate Price Earnings ratio of companies in the portfolio stands at around 8x which is substantially lower than the market and portfolio history. This would often be associated with distressed or troubled situations. However, on aggregate, our holdings demonstrate robust balance sheets and strong earnings as well as stable returns on equity.
A number of these companies are currently out of fashion, but I remain convinced that owning good businesses, run by able management and buying them at attractive prices is a sound way to invest.
I’ve bought numerous excellent businesses at attractive prices in 2019. This should serve the portfolio well over the coming three to five years. The ride might be bumpy but given the quality of the businesses we own, I feel confident about the destination.
Nitin Bajaj
sian markets appear to be in a contradictory state and I would characterise 2019 as having been a good year for regional stock markets but a bad year for regional stocks. As we have seen in the US, market leadership has become
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very narrow with a relatively small number of large-cap growth-orientated stocks driving a large proportion of overall gains from the broader market.
Stocks over macro
Valuation anomalies are my primary interest – where in my opinion the market either ignores or misunderstands the business. I will very rarely buy into good businesses when valuations are high. For me investing is as much about protecting the downside as it is about participating in the upside.
While portfolio positioning is driven by the availability of bottom-up opportunities, we currently see significant potential among some micro and monoline finance companies in India and the ASEAN region.
The opportunity in financials
These companies are capillaries of the financial system that channel funds to the unbanked population, which is crucial for financial inclusion. Many of these businesses deliver high returns on equity in their niche segments, while their valuations are relatively undemanding given their strong prospects. The key is to back the right management teams that execute well in these markets without taking undue risks.
Will Asian micro and monoline finance companies deliver high returns?
Past performance is not a reliable indicator of future returns. Note the views expressed may no longer be current and may have already been acted upon. Reference to specific securities should not be interpreted as a recommendation to buy or sell these securities but is included for the purposes of illustration only. The shares in the Fidelity Asian Values PLC are listed on the London Stock Exchange and their price is affected by supply and demand. The trust can also gain additional market exposure through gearing, potentially increasing volatility. Investments in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can also be more volatile than other more developed markets.
Five forces powering the Asian century
Amid short-term pressures, a handful of forces continue to drive long-term growth and regional restructuring
Countries like the Philippines are growing fast while others like China are beginning to age and accumulate wealth - spurring new financial, lifestyle and healthcare industries.
A growing, changing population(1)
Asia is also getting richer. Of the next 1 billion members of the global middle class, 90% will be in Asia.(4)
Rising middle class
Meanwhile, in terms of total middle class consumption, China will likely spend more than the US in 2020 and India is catching up fast (PPP, constant 2011 trilllion $ and global share).
Deepening intra-regional trade
Half of Asia’s population now lives in an urban area(6), fuelling the rise of megacities with more than 10 million inhabitants.
Multiplying megacities
Asia, with half the world’s internet users, is also a nursery of unicorns ($1 billon value start-ups)(5)
Booming internet business
India's population 2019: 1.36bn 2030: 1.5bn
Shanghai 2018: 26m 2030: 33m
Asia has the two most populous countries in the world, with India outgrowing China in the 2020s and growth strong in other parts of Asia as well.
Delhi 2018: 29m 2030: 39m(8)
China's population 2019: 1.43bn 2030: 1.46bn
Philippines population 2019: 108m; 2030: 124m(1)
Number of megacities - asia vs global(7)
By 2030, 2/3 of the global middle class are likely to be Asian(4)
Global total
2018
2025
49
40
Asia: 33
Asia: 26
Delhi and Shanghai are the world’s second and third largest cities, after Tokyo
4
5
3
2
1
Stronger trade ties
Services trade growing fast
Self-contained regional supply chains
Asia vs the US for intra-regional trade(5)
52%
41%
vs
$38.4bn
Alibaba’s Singles Day record sales total in 2019(9)
(5) McKinsey Global Institute, Asia's Future is Now, July 2019 (6) United Nations, World Urbanization Prospects: The 2018 Revision, p.xix (7) GlobalData, February 2019 (8) UN, The World’s Cities in 2018, p4 (9) Sherisse Pham, CNN Business, 12 November 2019
(4) Homi Kharas, The Unprecedented Expansion of the Global Middle Class: An Update, 2017, Brookings, p13, p11, p16
Still growing - Asia’s 10-year growth could be equivalent to the US population in 2019
Sources. (1) UN World Population Wallchart 2019 (2) UNFPA, Asia & the Pacific (3) Worldometers, using UN data; see also UN, Population 2030
China’s changing consumer tastes
Fidelity’s Hyomi Jie explores key opportunities in the restructuring Chinese economy
The rise of domestic brands that capture more sophisticated consumer tastes will create some compelling investment opportunities
By design, as portfolio manager of the Fidelity China Consumer Fund, I look to avoid heavy industrials like commodities and energy, as well as banks. Although important, these sectors are typically more mature, offer less growth and have strong state ownership, and thus generally focus less on generating returns for minority shareholders.
Although the consumer story has been a dominant theme in China for some time, what is perhaps less well appreciated is the extent to which the dynamics of this story are changing. Since the turn of the century, China has seen a tremendous growth of wealth due to better paid jobs. This was initially led by international businesses setting up in China to take advantage of low wages and a large workforce, but now we see local companies adapting and innovating to become industry leaders and catering for a local population with greater earnings power.
Elsewhere, with many people in China having now purchased basic consumer goods, there is a natural progression towards buying services and experiences. This will drive long-term demand for travel and experiences such as dining out. It will also drive greater demand for education. The private education industry has faced some regulatory headwinds, but these are now easing and companies with large enrolment and strong balance sheets will be able to consolidate and gain market share, which should be reflected in higher share prices for investors over time.
Important information: The above video is for investment professionals only and should not be relied upon by private investors. The ideas and conclusions here do not necessarily reflect the views of Fidelity’s portfolio managers and are for general interest only. The value of investments can go down as well as up, so your clients may not get back what they invest. This video may not be reproduced or circulated without prior permission. No statements or representations made in this video are legally binding on Fidelity or the recipient. Reference in this article to specific securities should not be interpreted as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.
Hyomi Jie
he opportunity to invest in how and what China consumes is significant and affects a broad range of companies beyond traditional consumer sectors. The short-term impact of coronavirus will be significant as we discuss in the video
at the bottom of this article. But it should not steer the structural consumption story in China off course. What is more, this story – powered by the twin drivers of the rising middle class and urbanisation – still offers a long growth runway.
The first wave of the consumer story saw people simply buying everyday goods like TVs, fridges and cars. While there are still vast untapped markets here, such as rural China, we are also entering a new stage of consumption - services and premiumisation.
I believe the trend of premiumisation and the rise of domestic brands that capture more sophisticated consumer tastes (that also want to stay true to their Chinese heritage) will become increasingly prominent and create some compelling investment opportunities.
Trading up
Many Chinese companies are recognising and responding to this trend by implementing multi-pricing strategies. For example, China’s largest brewer, CR Beer, now has a number of brands in its portfolio that tap in to different market segments and generate a desire for customers to purchase the next tier up. As a result, CRB now caters for all income groups and, without knowing, the consumer is frequently faced with a choice of multiple CRB brands when choosing what to drink.
CR Beer offers a choice to suit each market segment
Domestic fashion companies are also taking notice and are building premium lines for their brands. Sports company Li Ning, a company well-known in China for functional sportswear, has developed a high-end streetwear line that has been seen in New York Fashion Week. Another company is JNBY, which has one of the biggest shares among domestic designers in the affordable luxury market and has successfully been able to adapt to fast-changing fashion trends. A common thread between these companies is that they are producing fashion for a domestic Chinese market place with clear local twists, such as incorporating Chinese characters onto clothing.
Fidelity China Consumer portfolio managers, Hyomi Jie and Raymond Ma discuss the impact of Coronavirus on consumption trends in the region. They outline why, despite the virus, they are seeing pockets of opportunity in the near term as consumers turn to online grocery shopping and look at the potential impact of the built up demand being created whilst normal life is on hold.
Covid-19: The impact on Chinese consumption activity and trends
Past performance is not a reliable indicator of future returns. Note the views expressed may no longer be current and may have already been acted upon. Reference to specific securities should not be interpreted as a recommendation to buy or sell these securities but is included for the purposes of illustration only. The Fidelity China Consumer Fund can use financial derivatives which may expose it to a higher degree of risk and can cause investments to experience larger than average price fluctuations. Investments in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can also be more volatile than other more developed markets. The above video may not be reproduced or circulated without prior permission.
Active in Asia for over half a century
Over half a century, Fidelity’s understanding and knowledge of the region has compounded to provide our portfolio managers with a truly unique and independent view of the factors shaping returns from Asian companies
Fidelity Asia Fund
Managed by Teera Chanpongsang since 1 January 2014
A core fund of quality well-run companies that are positioned to benefit from ongoing structural change and reforms across the region. Teera adopts a disciplined investment process to identify stocks trading below their intrinsic value. He looks for companies where improving fundamentals are not reflected in the price, or where the growth potential is not fully understood. He also favours restructuring and turnaround opportunities, as well as cyclical turns in certain industries to find overlooked potential.
• • •
Fund details
Annualised performance over Teera's tenure
Launch date
13 October 1984
Fund AUM
£2,988m
Holdings
80-100
Comparative index
MSCI AC Asia ex Japan
Fund returns
12.4%
Benchmark
9.0%
Peers beaten
92%
Excess returns
3.4%
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2 of 3
1 of 3
3 of 3
Fund ratings
Annualised performance over Dale's tenure
Net Asset Value
15.1%
Share Price
15.3%
Index
19 April 2010
£1,334m
120-160
MSCI China
Investing in the key beneficiaries of China’s new growth drivers, fully utilising the enhanced investment powers of the trust’s closed-end structure. Dale seeks out solid cash generative businesses with good long-term prospects which may not be well understood by the market, and are therefore not reflected in valuations. He also focuses on smaller companies as these tend to be less well researched and, therefore, more often mispriced.
Managed by Dale Nicholls since 1 April 2014
Fidelity China Special Situations PLC
Annualised performance over Nitin's tenure
6.8%
9.5%
7.2%
2 of 2
13 June 1996
£287m
120-200
1 of 2
Nitin is a value investor who prefers to invest in underappreciated small and medium sized companies with an emphasis on downside protection. His investment decisions are based on rigorous fundamental analysis, with a bottom-up stock selection approach making use of Fidelity’s proprietary research resources. Investing across a large and diverse universe of over 17,000 listed stocks to find Asia’s smaller companies that have the potential to turn into the winners of tomorrow.
Managed by Nitin Bajaj since 1 April 2015
Fidelity Asian Values PLC
Annualised performance over Anthony's tenure
8.8%
100%
6.5%
24 September 2014
£532m
25-35
MSCI AC Asia Pacific ex Japan
A high conviction stockpicking approach which brings together the region’s best investment ideas in a concentrated portfolio. Anthony looks for three key characteristics in a stock: weak sentiment and low valuations, where fundamentals are strong and improving relative to consensus expectations. If a stock ticks all three boxes – and liquidity is ample and correlation with other holdings low – he is willing to take a significant active position.
Managed by Anthony Srom since 24 September 2014
Fidelity Asia Pacific Opportunities Fund
Annualised performance over Dhananjay's tenure
12.6%
9.6%
96%
3.0%
11 July 2011
£90m
60-90
MSCI Emerging Markets Asia
Focused exposure to Asia’s true emerging economies such as ASEAN, China and India through a portfolio of high-quality growth stocks. A key characteristic of Dhananjay’s focus is moat stocks. In this approach he looks for companies with sustainable growth prospects with the ability to reinvest at attractive rates. Dhananjay favours industry consolidators with improving returns and is cautious on stocks with high regulatory risk.
Managed by Dhananjay Phadnis since 1 November 2013
Fidelity Emerging Asia Fund
6.1%
1.8%
73%
4.3%
14 September 2011
£170m
30-50
MSCI Golden Dragon Custom Consumer Index
Investing in companies related to what China consumers buy and the way they consume; trends underpinned by the long-term structural drivers of China’s growing middle class, rising income, increasing urbanisation and technological innovation. Hyomi looks for solid cash generative businesses based on bottom-up research and value-chain analysis, as well as looking for incremental change that will drive an improvement in a company’s earnings. The portfolio exhibits a structural growth bias and will tend to be more expensive than the broader China market as growth, and especially certainty of growth, comes at a premium.
Managed by Hyomi Jie since 1 August 2017
Fidelity China Consumer Fund
Annualised performance over Hyomi's tenure
Annualised performance over Jochen's tenure
8.9%
5.9%
77%
19 August 2013
£93m
MSCI AC Asia Pacific ex Japan High Dividend Yield
An unconstrained approach which aims to deliver a dividend focused total return with an emphasis on capital preservation. Jochen looks for companies with a good track record of capital allocation and an attractive yield struck off a dividend that will be well-supported throughout a range of economic scenarios. Combining characteristics like strong balance sheets and predictable cash flows with a strict valuation discipline also has the potential to provide strong relative downside protection.
Managed by Jochen Breuer since 1 October 2016
Fidelity Asian Dividend Fund
Past performance is not a reliable indicator of future returns. The value of investments can go down as well as up and clients may get back less than they invest. The Fidelity funds featured invest in overseas markets which means their value can be affected by changes in currency exchange rates. Some funds invest in a relatively small number of companies and, therefore, may carry more risk than funds that are more diversified. The funds may also use financial derivative instruments for investment purposes, which may expose them to a higher degree of risk and can cause investments to experience larger than average price fluctuations. Investments in Fidelity funds should be made on the basis of the current prospectus, which is available along with the Key Investor Information Document, current annual and semi-annual reports free of charge on request by calling 0800 368 1732. The shares in Fidelity investment trusts are listed on the London Stock Exchange and their price is affected by supply and demand. They can gain additional exposure to the market, known as gearing, potentially increasing volatility. They invest in emerging markets which can be more volatile than other more developed markets. They also invest more heavily than others in smaller companies, which can carry a higher risk because their share prices may be more volatile than those of larger companies and the securities are often less liquid.
Past performance is not a reliable indicator of future returns.
Discrete five year period performance overview
Source Morningstar as at 31 January 2020, bid-bid, net income reinvested. ©2020 Morningstar Inc. All rights reserved. All ratings as at 31 December 2019.
in Asia Pacific ex Japan AUM
US$53bn
Investment Professionals based across Asia Pacific
122
QFII quota, amongst the highest allocated to a foreign buy-side manager
US$1.2bn
Our WFOE has become the 1st global asset manager to register with the AMAC as a private fund manager in China
Source Fidelity International. 30 September 2019. Assets quoted include Assets under Administration. QFII = Qualified Foreign Institutional Investor; AMAC = Asset Management Association of China; WFOE = Wholly Foreign Owned Enterprise. Research professionals include both analysts and associates.
Click on one of the below for details
Fidelity's FUNDS AND investment trusts
• Asia Fund
• Asia Pacific Opportunities Fund
• Emerging Asia Fund
• China Consumer Fund
• Asian Dividend Fund
• Fidelity China Special Situations PLC
• Fidelity Asian Values PLC
