Fidelity China Special Situations (LON:FCSS) was launched in April 2010 aiming to generate long-term capital growth from investing in Chinese companies or companies that generate the majority of their revenues in China. Manager Dale Nicholls invests for the long term, seeking companies with long-term growth potential that are trading at reasonable valuations. FCSS’s NAV and share price absolute total returns have been very strong over the last 12 months, and the trust has meaningfully outperformed the index over one, three and five years and since the fund’s inception. FCSS has also outperformed the majority of its open- and closed-ended peers over one, three and five years.
Investment strategy: Focus on quality and value
The manager has a bottom-up investment approach and the bulk of the portfolio is invested in mid- and small-cap stocks with positive growth profiles that he believes are mispriced. He is able to draw on Fidelity’s broad analyst team to build a portfolio, typically comprising 130 to 140 positions, focusing on companies with robust cash flows and strong management. Site visits and meeting company managements are a key part of the investment process. Gross gearing at end-February 2017 was 27.5%, this compares to the permitted level of 30.0%.
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