Fidelity China Special Situations Plc

This trust invests predominantly in companies listed both domestically in China and on the Hong Kong Stock Exchange. The manager is able to make use of Fidelity's investment licences in China, which are among the largest of any international investor, offering investors direct exposure to the China growth story. The manager can also invest in Chinese companies listed on other exchanges around the world, as well as companies with significant interests and primary revenue exposures in China.

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Our Opinion
Fund Manager
Key Facts
Fund Performance
Risk
Investment process
ESG

Our Opinion

Dale has extensive experience in the Far East and this, coupled with the breadth and depth of Fidelity’s resources in this region at his disposal, makes the Fidelity China Special Situations trust an attractive proposition for investors looking for exposure to the Chinese market. However, due to its bias towards smaller and medium-sized companies in a developing market, this trust is not for the faint-hearted and investors should be prepared for large fluctuations in the value of their investment. Those willing to take the risk could be handsomely rewarded over the long term.

Fund Manager

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Fund Manager

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Dale Nicholls

Dale Nicholls joined Fidelity in 1996 as a Research Associate in the Tokyo office. In 2003, he was promoted to portfolio manager of the Fidelity Pacific Fund, a role he continues to hold. He also manages Fidelity China Special Situations PLC. Before joining Fidelity, Dale worked at Bankers Trust Asia Securities and as a Market/Business Analyst at Sony Corporation, both in Tokyo. He graduated from the Queensland University of Technology in Australia.

Dale Nicholls

Dale Nicholls joined Fidelity in 1996 as a Research Associate in the Tokyo office. In 2003, he was promoted to portfolio manager of the Fidelity Pacific Fund, a role he continues to hold. He also manages Fidelity China Special Situations PLC. Before joining Fidelity, Dale worked at Bankers Trust Asia Securities and as a Market/Business Analyst at Sony Corporation, both in Tokyo. He graduated from the Queensland University of Technology in Australia.

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Key Facts

Asset type Equity

Annual Income (Historic) -

Sector China/Greater China

Gearing-

Fund Size-

Fund Manager Start Date 01 April 2014

Ongoing Charges Figure (OCF) -

Payment Date(s) Jun

Share price discount or premium -

Fund Performance

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Risk

Single-country investing, especially in developing markets, is always higher risk than developed markets. This is particularly true in China where government intervention in sectors has consistently taken place in recent years – sometimes to the detriment of those affected. The manager also tends to have a bias towards small and medium-sized companies, which themselves are normally higher risk than larger blue chips. However, this risk is somewhat mitigated by the extensive research team and systems available to the manager, along with a well-diversified portfolio of stocks, typically between 120 and 160 in number. The manager is also able to invest in unlisted companies – the limit of which was raised to 15% in 2021. Although this increases the investment opportunity for the manager, its full deployment would also increase the risk profile of the trust. An additional risk which investors should take into account is currency.

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Fund Performance

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Risk

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Single-country investing, especially in developing markets, is always higher risk than developed markets. This is particularly true in China where government intervention in sectors has consistently taken place in recent years – sometimes to the detriment of those affected. The manager also tends to have a bias towards small and medium-sized companies, which themselves are normally higher risk than larger blue chips. However, this risk is somewhat mitigated by the extensive research team and systems available to the manager, along with a well-diversified portfolio of stocks, typically between 120 and 160 in number. The manager is also able to invest in unlisted companies – the limit of which was raised to 15% in 2021. Although this increases the investment opportunity for the manager, its full deployment would also increase the risk profile of the trust. An additional risk which investors should take into account is currency.

Quote from the Fund Manager

Being on the ground in China allows us to cut through the noise and invest in some of the world’s most innovative and fast-growing companies.

Dale Nicholls

Dale Nicholls

Lead Manager

Investment process

Dale focuses on identifying and analysing companies rather than economies. He believes that the best investments are in those companies that have good long-term prospects: cash-generative business that are controlled by a strong management team. He looks for stocks with these characteristics but, crucially, which are underestimated by the market and are therefore undervalued. He will invest in any size of company were this mispricing appears but tends to have a bias towards small and medium-sized companies. This area of the market is generally less well researched by the market and is where Fidelity's large investment team presence in the region can result in greater potential opportunities.

Risk

Single-country investing, especially in developing markets, is always higher risk than developed markets. This is particularly true in China where government intervention in sectors has consistently taken place in recent years – sometimes to the detriment of those affected. The manager also tends to have a bias towards small and medium-sized companies, which themselves are normally higher risk than larger blue chips. However, this risk is somewhat mitigated by the extensive research team and systems available to the manager, along with a well-diversified portfolio of stocks, typically between 120 and 160 in number. The manager is also able to invest in unlisted companies – the limit of which was raised to 15% in 2021. Although this increases the investment opportunity for the manager, its full deployment would also increase the risk profile of the trust. An additional risk which investors should take into account is currency.

ESG

ESG - Integrated  

ESG is fully integrated within the stock research and investment decision-making process with this fund. Dale believes that you cannot separate ESG from financial analysis, as ESG issues have a direct impact on fundamentals. In order to incorporate this analysis, Fidelity’s research team produces its own in-depth analysis on each company in the investable universe. It will also perform sector and thematic analysis to complement this. The output is available for all fund managers, including Dale. As such, ESG risks and opportunities are monitored and checked throughout the process, including when Dale is putting the portfolio together as he can see the exposures each stock could add. To monitor this there is oversight from the risk governance team. This work is also used for good, with Dale and the wider Fidelity group using their shareholding to influence corporate behaviour and create more value for both investors and society.

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