Nitin Bajaj and Ajinkya Dhavale, co-managers of Fidelity Asian Values (FAS), aim to provide investors a unique portfolio of smaller-cap equities from across Asia. They look to differentiate the trust by using a bottom-up benchmark agnostic approach to identify potential stocks, combined with a strong valuation discipline. This has contributed to a portfolio that is significantly differentiated from the benchmark and most other vehicles investing in the region. This has contributed to outperformance over the long term. 

Ajinkya has recently been promoted to co-manager, having previously been Nitin’s assistant manager since 2020.

FAS’ differentiation is best exemplified by Nitin and Ajinkya’s current ‘anti-tech’ positioning, based on the belief that valuations are too high as a consequence of momentum rather than quality driving share prices. In contrast, the managers are significantly overweight China, an allocation that has recently been increased and refocused on the domestic consumption story.

The Trust’s Gearing level, while still modest, remains above historical averages. Fidelity’s house style is to use derivatives instead of traditional borrowing facilities which also allows the managers to take short positions in stocks they believe will fall. As at 31/05/2024, net exposure was 107.7% and gross exposure 114.3%, both figures being somewhat above their long-term averages.

Another unique feature of FAS is the variable management fee. This is designed to align the interests of the manager with investors, by changing the fee depending on performance relative to the benchmark. Should the trust underperform, the charges are reduced, and vice versa for outperformance.