Fidelity Asian Smaller Coms A-Acc-EUR |



by Samuel Lo

Fidelity announced that Ajinkya Dhavale will be appointed as comanager of Fidelity Asian Smaller Companies effective Feb. 29, 2024, while Nitin Bajaj will continue to assume the fund’s lead manager role. This does not change the fund’s Morningstar Medalist Ratings. Dhavale brings 18 years of experience and specializes in Korea and Taiwan small-cap names. He joined Fidelity in August 2011 and has worked with Bajaj for a decade, including having been assistant portfolio manager for the fund since June 2020. He has shown good synergy with Bajaj during our meetings, and we think his naming is sensible and a formalization of his contributions to the strategy. Lead manager Bajaj, who has successfully steered the strategy since September 2013, continues to be the final decision-maker here and is a key driver of our confidence. As such, we reiterate the strategy’s People rating at Above Average. |
A capable lead portfolio manager, deep analytical resources, and a disciplined investment process continue to drive our confidence in this Asia small-cap strategy. We maintain its Above Average People and Process ratings. Lead manager Nitin Bajaj brings more than two decades of investment experience and has led this strategy via its Luxembourg-domiciled vehicle since September 2013. He is a seasoned Asia small-cap investor who possesses deep knowledge in this space and has shown a great commitment to his value discipline throughout different market environments. While his increased workload from taking over Fidelity China Focus in late 2022 remains a watch point, we take comfort that he continued to demonstrate intimate knowledge for both strategies during our meetings. Bajaj is closely supported by Ajinkya Dhavale, who has 20 years of experience and was appointed as this strategy’s comanager in February 2024. Bajaj remains as the final decision-maker, with Dhavale helping in identifying stock ideas and acting as a sounding board. The managers draw from Fidelity’s Asia-Pacific ex-Japan equity team, which has around 50 members, including five small-cap analysts. This is one of the largest investment teams in the region and continues to provide ample analytical support. The bottom-up investment process has a clear value bias. Bajaj focuses on finding well-run companies managed by competent management teams and pays particular attention to their valuation. He typically requires a significant margin of safety in the share price when initiating his positions and tends to steer away from crowded areas, with Taiwan and India small caps being recent examples. The strategy’s asset size stood at around USD 1.7 billion as of year-end 2024. We remain watchful of the strategy’s capacity, given its focus on smaller caps and the fact that Bajaj has been including some of his best ideas here into the much larger Fidelity China Focus portfolio, although we have not observed discernible signs that point to capacity issues. The strategy has delivered robust results over Bajaj’s tenure, coupled with lower volatility compared with the MSCI All Country Asia ex Japan Small Cap Index and average peer. That said, Bajaj’s value discipline and benchmark-agnostic approach often results in lumpy returns. |
Morningstar Pillars | |
People | Above Average |
Parent | Above Average |
Process | Above Average |
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