Fidelity Asian Values (FAS) seeks long-term capital growth through investment in Asian stocks, excluding Japan. The manager, Nitin Bajaj, adopts a value investing style focused on smaller-cap stocks, a sector which he believes nurtures ’the winners of tomorrow’, before they become well-known and expensive. This approach has been unfashionable for many years, and value and small-cap stocks have underperformed larger growth stocks, due to the popularity of mega-cap tech and other growth stocks. While this has hurt FAS’s returns, which have underperformed the benchmark over the long term and especially in Q120, it has generated some excellent opportunities for Bajaj to acquire quality businesses at attractive valuations. Following a Q420 bounce back of value stocks, including the smaller-cap companies Bajaj favours, his efforts to exploit these opportunities appear to have started to pay off. FAS’s performance has improved recently in absolute terms and against its blended benchmark.
