Fidelity China Fund seeks to achieve returns in excess of the MSCI China Index over the suggested minimum investment time period of five to seven years.
BOC Aviation gained following recent upbeat management guidance on the demand outlook for aircraft leasing. The company has a long runway for growth, with solid leasing demand for aircraft against relatively tight supply, net lease yield recovery and an expansion in new growth opportunities. The increasingly lower financing rate received by BOC Aviation versus its closest peers implies that the company is likely to gain market share via potential industry consolidation among top tier lessors. Sinotruck Hong Kong advanced on expectations of solid demand growth in the HDT industry. The company is expected to benefit from potential re-opening recovery, which is likely to have a positive impact on HDT sales in the near term. Also adding value were our positions in PetroChina and China Petroleum and Chemical Corporation. Despite crude oil price decreased during the period, PetroChina managed to maintain stable gas margin, attributing in part to China domestic gas price reform, while China Petroleum and Chemical Corporation remains defensive with stronger than expected refining oil business recovery.
China Yongda and Zhongsheng Group slid due to weakening auto demand and intensifying price wars from EV sales in China. Nevertheless, we retain conviction in China Yongda, as it has a robust balance sheet with solid cash flow and as management is willing to return capital to investors. Moreover, its current valuation offers a high margin of safety. In addition, the growth of used car sales should offset some of the margin pressure on new cars. For Zhongsheng, margins for new cars appear to have bottomed out, while aftersales services remain intact and offer a solid cornerstone for profits.
What is Fidelity China Fidelity China is an Managed Funds investment product that is benchmarked against World Emerging Markets Index and sits inside the Foreign Equity - Asia ex Jap Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Fidelity China has Assets Under Management of 68.16 M with a management fee of 1.2%, a performance fee of 0.00% and a buy/sell spread fee of 0.8%.
How has the investment product performed recently?
The recent investment performance of the investment product shows that the Fidelity China has returned 19.74% in the last month. The previous three years have returned 1.38% annualised and 19.15% each year since inception, which is when the Fidelity China first started.
How is risk measured in this investment product?
There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Fidelity China first started, the Sharpe ratio is NA with an annualised volatility of 19.15%. The maximum drawdown of the investment product in the last 12 months is -17.43% and -45.01% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product?
Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Fidelity China has a 12-month excess return when compared to the Foreign Equity - Asia ex Jap Index of -9.25% and 1.59% since inception.
Does the investment product produce Alpha over its Peers?
Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Fidelity China has produced Alpha over the Foreign Equity - Asia ex Jap Index of NA% in the last 12 months and NA% since inception.
What are similar investment products?
For a full list of investment products in the Foreign Equity - Asia ex Jap Index category, you can click here for the Peer Investment Report.
What level of diversification will Fidelity China provide?
Fidelity China has a correlation coefficient of 0.89 and a beta of 1.72 when compared to the Foreign Equity - Asia ex Jap Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
How do I compare the investment product with its peers?
For a full quantitative report on Fidelity China and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Fidelity China with the World Emerging Markets Index?
For a full quantitative report on Fidelity China compared to the World Emerging Markets Index, you can click here.
Can I sort and compare the Fidelity China to do my own analysis?
To sort and compare the Fidelity China financial metrics, please refer to the table above.
Has the Fidelity China been independently verified by SMSF Mate?
This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
How can I invest in Fidelity China?
How do I get in contact with the Fidelity China?
Comments from SMSF Mates
SMSF Mate does not receive commissions or kickbacks from the Fidelity China. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - March 31, 2023 The Fund delivered 9.6% net of fees, while the index returned 6.0%. Robust stock selection in the Chinese consumption and information technology sectors enhanced gains. An overweight stance in energy also added value. Conversely, an underweight allocation to selected names in communication services weighed on returns. Within internet sector, an underweight stance in online services platform Meituan and e-commerce company JD.com added relative value. In addition to geopolitical turmoil, investors remained concerned over intensifying competition and potential margin pressure in the Chinese ecommerce space, which led to a selling spree during the quarter. Elsewhere in energy, shares of PetroChina and China Petroleum and Chemical Corporation took gains amid recent OPEC oil production cut and an uptick in demand due to recovery in China. Holdings in internet search engine related companies Baidu and Zhejiang Dahua Tech gained on news flows that they have set up a development team to work on a ChatGPT-like chatbot. The subsequent supportive statements from China’s Ministry of Science and Technology, which expressed its desire to push for the integration of artificial intelligence into Chinese society and economy, buoyed sentiment towards these stocks. On contrary, an underweight stance in Tencent and NetEase weighed on relative returns. Their share price was further boosted as the technology giant received new game licenses from the Chinese regulators earlier in the year. This strengthens the view that the official rhetoric turned notably more positive, suggesting that regulatory pressure on the gaming sector has somewhat eased, and the industry will therefore experience a cyclical uptrend going forward. Chinese automobile dealers China Yongda and Zhongsheng Group declined following weaker overall automobile demand in China, rising production costs, fading automobile subsidies and intensifying price wars.
Performance Commentary - January 31, 2023
Performance Commentary - December 31, 2022 The Fund delivered 8.2%, while the index returned 7.6%. Robust stock selection in industrials and materials enhanced gains. An overweight stance in consumer staples also added value. Conversely, selected names in communication services weighed on returns.
Conviction holdings added value
Conviction positions in China and Hong Kong, including Focus Media Information Tech and Sinotruk Hong Kong, saw a trend reversal of sorts amid hopes of an economic re-opening. Furthermore, Focus Media announced a special dividend, highlighting its management’s commitment towards its shareholders. Zhaojin Mining added value after it announced that mining company Zijin Mining has initiated a partnership in its offshore project. Furthermore, an improving outlook for gold prices over the quarter and a slowing rate of interest rate increases as indicated by the US Federal Reserve boded well for the stock.
Underweight in Chinese consumption names contributed
The internet sector suffered heavy losses amid regulatory concerns following the announcement of China’s new leadership team earlier in the quarter, as investors remained cautious over the country’s common prosperity goals. Against this backdrop, the underweight stance in online services platform Meituan and China’s second largest ecommerce platform JD.com added relative value. Meituan also faced selling pressure after its key stakeholder Tencent Holdings announced that it would divest its stake in the food delivery major. Likewise, not holding electric vehicles (EV) manufacturer NIO enhanced relative gains, following ongoing concerns over demand momentum for EVs in China, which is the world’s largest EV manufacturer.
Performance Commentary - September 30, 2022 Preferred holdings in real estate and health care added value The position in medical consumables supplier Shandong Weigao advanced after it reported robust revenues for the quarter and improved efficiency in its cost management. The company has diverse business lines, making it resilient against various policy changes and risks. Shares in housing transactions company KE Holdings supported performance as it reported healthy results. A positive outlook for company-operated Beike, a platform for housing transactions and services, further buoyed investor sentiment.
Overweight allocation to energy sector proved rewarding The position in energy enterprise China Shenhua Energy added relative value. The firm offers a desirable investment target due to the sector’s modest valuation, relatively high dividend ratio and increasing coal prices. The stock generates robust free cash flow yields and has a significant cash balance, which it uses to pay attractive dividend yields.
Selected positions and underweight stance in growth names held back gains An underweight allocation to consumer discretionary company Meituan detracted from performance. Investor confidence strengthened as it delivered better-than-expected quarterly results. It also reported resilient delivery service and narrowed new initiative losses. In addition, the position in China Merchants Bank fell as the sector suffers from weak loan demand from its corporate and retail client base given the slowdown in the economy.
Performance Commentary - June 30, 2022 The position in housing transactions and services platform KE Holdings gained on better than expected results in the first quarter. It reported profits, beating consensus expectations of a deep loss. Shares in China Life Insurance rose as its valuations turned attractive. The position in Zhuzhou CRRC Times Electric benefited from supportive policies for new energy vehicles, as it is a major supplier in the electric vehicle (EV) supply chain. Shares in Hansoh Pharmaceutical advanced as investors looked for defensive businesses with strong balance sheets in the current volatile environment.
The underweight allocation to Meituan and not holding JD.Com detracted from performance as their shares advanced on expectations of a recovery in consumption following the re-opening of major cities and reduced mobility restrictions. Not holding automobile manufacturers BYD and Li Auto proved unfavourable as their shares rallied following indication that China would extend purchase tax exemptions for new energy vehicles.
Performance Commentary - March 31, 2021 The Fund’s outperformance was driven by the sector rotation into selected value-oriented high-quality stocks in which the fund holds an overweight position. Preferred holdings outperformed The position in Lenovo gained on the back of improving fundamentals, which drove strong share price performance. In addition to sustained high demand for personal computers, its service business is gaining traction, which bodes well for higher margins and better earnings visibility than pure hardware sales. The server business is bottoming out and Lenovo is well positioned to capture the uptrend with its best in class product and software suite. Preferred holdings in China Mobile and CNOOC, which were negatively impacted by geo-political tensions and lagged the growth rally in 2020, rose over the quarter as investors favoured their strong fundamentals and attractive valuations
Performance Commentary - February 28, 2021 Invests in 70 to 80 Chinese companies and draws on the research capabilities of Fidelity’s analysts based on the ground in China and Hong Kong. The Portfolio Manager is aware of the macro environment and policy changes, but believes bottom-up company specific research adds the most value when investing in China
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