Large cap tech leaves Fidelity Asian Values behind – Fidelity Asian Values says that its share price returned +24.9% and the NAV returned +19.3% for the year ended 31 July 2017. This compares to the MSCI All Countries Asia ex Japan Index, which rose by 28.2%. The Board is recommending an 11.1% increase in the dividend to 5p.
The chairman says that Nitin’s value bias and his preference for smaller companies both weighed on performance in a market environment where larger companies outperformed smaller companies and growth stocks outpaced value stocks.
Nitin Bajaj’s report says that “The primary reason for the variation in performance from the Comparative Index last year was stellar performance of technology companies, such as Samsung, Alibaba and Tencent appreciating between 60-90%. These are sound businesses run by good management teams, but I did not feel comfortable with the valuations being ascribed to them as it leaves little margin of safety. Hence, I have not invested in these stocks so far and do not see any reason to change this view at current prices. Valuation discipline is at the core of our investment philosophy and that will not change.
As a consequence of investors’ focus on large technology companies there was a wide dispersion in the returns of the large companies index compared to the broader smaller companies’ index with returns of 28.2% and 15.0% respectively over a one year basis. This is amongst the largest dispersions between the two indices over the last 20 years. Despite this, there is little difference in the long term returns between the two groups.”
FAS : Large cap tech leaves Fidelity Asian Values behind