FAV’s manager, Nitin Bajaj, joined Hardman & Co for a wide-ranging Q&A session. It gave investors a detailed insight into his investing approach as well as the current portfolio. The trust’s key characteristics are buying good businesses (defined as having products that customers want to buy, earning high ROE, with honest and competent people) bought at good prices (defined as offering a margin of safety), and these themes ran through the session. These traits mean that ESG is embedded as a good business practice, not a marketing slogan, and regulatory risk should be below average.
One of the highlights was exploring Nitin’s views on why the trust has beaten the benchmark by, on average, 5% p.a. over five years. He identified two key drivers for this: i) repeating the strict investment process and discipline, thereby ensuring the avoidance of drastic errors; and ii) the depth and quality of the investment people.
Another area investors have looked at is China where the trust has 32% in China and HK investments but it really not should be seen as a proxy for that market. It does not have large-cap exposure. As Nitin explores in this interview, and we have detailed in our notes, by investing in companies that help promote “common prosperity” and are good employers, regulatory risk should be well below average.
Other topics included how stocks are selected, case studies of the largest positions, a philosophy of buying businesses not stocks, gearing, ESG, attitudes to sectors (or rather why sectors are not important), and when the investment approach is and when it is not in favour.
Fidelity Asian Values plc provides shareholders with a differentiated equity exposure to Asian markets. Asia is the world’s fastest-growing economic region and the trust looks to capitalise on this by finding good businesses, run by good people and buying them at a good price. The trust favours smaller companies as this gives it the opportunity to find mispriced businesses, the “winners of tomorrow”, before they become well known. With nearly 19,000 listed companies in Asia – more than the rest of the world put together – there is a huge opportunity for a fundamental research-driven stock picker that can fully utilise Fidelity’s extensive locally-based analyst team.