A disciplined approach in unprecedented times

Published 10 March 2020
News of coronavirus (COVID-19) in recent weeks has contributed to increased market volatility. In this piece, Nitin Bajaj explains how he’s been navigating markets and shares his outlook for the coming months.

This is an unprecedented event for almost all of us and even scientists and epidemiologists are not certain of how things will unfold over the next few months. Over the long-term, I think coronavirus (COVID-19) will be contained - whether through natural causes or a vaccine. Taking the long view, it’s unlikely that there will be a significant impact on how the world functions.  

Performance of the portfolio over the last nine months has been subdued and has not kept pace with the market. It is challenging to explain the moves in many of the stocks - both within the Company and in the market in general. There has been a dominance of growth companies, momentum strategies and stocks that fit a particular theme - technology or biotech, for example. At times, the narrative of the stock market has been quite different from the reality of business. Value strategies have struggled in this environment. 

What must be emphasized though, is that I continue to have utmost faith in my process. The most time-tested way of investing is to own good businesses, run by competent and honest management teams and to buy them at attractive prices. Avoiding bubbles and unsustainable valuations is key to long-term compounding no matter how painful it is in the short-term. Over time, the quality of businesses and their valuations will matter.

I am happy with the portfolio of businesses we own - both the quality and price at which we own them. On average, we own superior businesses to the market at much more attractive prices.

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The value of investments and the income from them can go down as well as up, so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments are subject to currency fluctuations. Fidelity Asian Values Trust PLC can use financial derivative instruments for investment purposes, which may expose it to a higher degree of risk and can cause investments to experience larger than average price fluctuations. This trust invests 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. This Investment Trust invests in emerging markets which can be more volatile than other more developed markets. The shares in the investment trust are listed on the London Stock Exchange and their price is affected by supply and demand. The investment trust can gain additional exposure to the market, known as gearing, potentially increasing volatility. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.

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