Fidelity Asian Values (FAS) is managed by Nitin Bajaj. He employs a very disciplined process, seeking good businesses run by competent management, trading on attractive valuations. The polarisation in the stock market affords him many opportunities to invest in companies that fulfil his investment criteria. While the style bias against value stocks has affected the manager’s relative performance in recent years, FAS has a long-term record of outperformance versus both its previous and new benchmarks. The portfolio is trading on an average forward earnings multiple of less than 10x but has a 15% ROE, showing the manager is ‘seeking value without compromising on quality’. FAS also offers a 2.2% dividend yield, which is the highest in the three-strong AIC Asia Pacific Smaller Companies sector.
Asia offers the prospect of higher growth versus the advanced and world economies, supported by expanding middle classes and a trend towards more premium products and services. Similar to global markets, there has been a wide dispersion between the performance of momentum and value stocks in Asia, which may provide an opportunity for investors with a longer-term view.
◼ Well-diversified portfolio of primarily smaller-cap Asian equities.
◼ Disciplined, repeatable investment process focusing on attractively valued, high-quality businesses.
◼ Focus on the preservation and long-term growth of capital.
◼ Long-term outperformance versus benchmarks.
◼ Material increases in the annual dividend in recent years.
FAS is currently trading at a 1.3% discount to cum-income NAV. Over the last 12 months the valuation has ranged from a 10-year premium high of 5.7% to a 2.9% discount, averaging a 2.3% premium. Over the last three, five and 10 years, FAS has traded at average discounts of 1.2%, 5.2% and 7.6% respectively.