Fidelity Asia - is China still a good place to invest?

• Teera Chanpongsang thinks Chinese companies can still do well even with a trade war
• The fund also invests in other countries like India and Taiwan
• He’s an experienced manager, but we currently have more conviction in others

Our view

Teera Chanpongsang has a lot of experience when it comes to investing in Asia. He started managing funds focused on one Asian country, including India and Thailand, twenty years ago. And since 2011 his funds have invested more broadly across the region, including higher-risk emerging markets.

We think he uses a sensible process, which has the potential to deliver good long-term returns for investors. He can also use the research produced by Fidelity’s analysts that are based in countries from Hong Kong and Singapore to Delhi and Taiwan.

At the moment the Fidelity Asia Fund isn’t on the Wealth 150+ list of our favourite funds. We have more conviction in other managers investing in Asia, who have built stronger track records over a prolonged period. We’ll keep an eye on the fund though and see how it progresses.

Past performance is not a guide to the future. Source: Lipper IM to 30/11/2018

Fund review

The potential for a trade war between the US and China has been one of investors’ main concerns this year. It’s made markets volatile and there could be more setbacks before things get better.

Teera Chanpongsang doesn’t think the trade war is a deal breaker for investing in China, or the rest of Asia. He thinks China has enough tools in its kit to limit the impact of trade tariffs from the US. There’s scope for Chinese businesses to do things more efficiently and save costs, move some of their manufacturing facilities to other Asian countries, or pass tariffs back on to US consumers by raising prices.

Some of the fund’s investments in Chinese companies have held back performance recently though, including internet company Tencent. It didn’t help that approval for one of its online games was also delayed.

But the manager sees volatility as a chance to add to some investments at better prices. AIA Group, China’s largest insurance company, is an example. It already does a lot of business in five of the country’s most prominent cities. But it’s planning a nationwide expansion and could benefit as more people buy financial products and services, like insurance.

He also recently bought a new investment in Hong Kong-based lender Bank of China and added to an investment in Indian bank HDFC.

Overall the manager continues to focus on companies he thinks are run by great management teams with the potential to grow their earnings over time. He expects some could become leaders within their industry, while others have the potential to overcome shorter-term issues.

Other key holdings currently include Taiwan Semiconductor Manufacturing. It’s a leader in making components such as chips for smartphones and tablets. One of its main competitors recently withdrew from the market, which leaves it in a stronger position to be able increase prices without worrying about its customers going elsewhere.

Please read the Key Features/ Key Investor Information in addition to the information above.

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