Fidelity China Special Situations - Seeking out and capitalising on structural winners

Fidelity China Special Situations (FCSS) aims to deliver long-term capital growth from a portfolio of stocks listed mainly in China and Chinese companies listed abroad. Manager Dale Nicholls focuses on undervalued companies. He favours consumer sectors set to benefit from structural trends driven by the burgeoning growth of China’s middle class. He sees most opportunities in mid- and small-cap technology, healthcare and e commerce stocks and among unlisted companies, all of which are often under-researched and thus mispriced. For Nicholls, the recent pull-back in Chinese markets has created ‘a great environment in which good but undervalued companies offer even better value’. Nicholls’ approach has delivered absolute returns and outperformance of FCSS’s peers, and its benchmark, the MSCI China Index both recently and long term. Relative performance has been especially strong over the past year, thanks to superior stock selection and sector allocation decisions.