Fidelity China Special Situations (FCSS) aims to deliver long-term capital growth, following a bottom-up approach to investing in companies listed in China, and Chinese companies listed elsewhere. The trust marks its 10th anniversary in April 2020 and, since inception, it has generated an annualised NAV total return of 11%. Chinese equities have been relatively out of favour for some time against a backdrop of the US-China trade dispute, Hong Kong political protests and, more recently, the coronavirus. The manager, Dale Nicholls, is finding exciting opportunities at attractive valuations, and continues to focus primarily on smaller companies that can benefit from long-term secular growth trends.
China’s GDP growth rate is slowing, and the recent outbreak of the coronavirus is likely to further reduce expectations for 2020. However, the economy is still relatively robust compared to the developed world. Furthermore, the headline GDP growth belies many areas of economic activity that are vibrant, with strong prospects for multi-year high growth. Investors seeking exposure to Chinese equities may benefit from a selective bottom-up approach, with a long-term horizon.
- Dale Nicholls has over 24 years’ investment experience and a successful track record managing the trust since April 2014.
- Rigorous, research-driven approach to investing in China, supported by Fidelity’s well-resourced team of analysts based in China and Asia.
- Offers direct exposure to China’s continuing growth, with a bias to less wellresearched small- and mid-sized companies.
In June 2019, the board adopted a formal policy aiming to maintain the discount in single digits. FCSS currently trades at a 9.3% discount to cum-income NAV, and the board has been proactive in helping to stabilise the volatility of the discount and the trust’s share price during the coronavirus outbreak. There is scope for the discount to narrow should investor sentiment towards China improve.