Fidelity China Special Situations plc (LON:FCSS) offers investors direct exposure to the Chinese growth story from a diverse range of sources. Manager Dale Nicholls has a bias to small- and mid-cap companies as he views them as the best way to capture the growth opportunities from the increasing wealth of the Chinese consumer and to generate excess returns. The trust also has structural Gearing in place to support the upside potential. Furthermore, the manager can invest in private companies, with a current weighting in the mid-teens, to create further differentiation from the benchmark and broaden the growth
opportunities.
Whilst the manager is focussed primarily on capital growth, FCSS has increased its Dividend in every year since inception with the most recent annual dividend offering a historic yield of 3%. The trust was awarded Kepler’s Income & Growth rating for 2024.
Dale has delivered significant outperformance of the benchmark over the long term. Relative performance in the short term has also been strong, albeit against the backdrop of challenging conditions for broader Chinese markets. This has contributed to the shares trading at a wide Discount to NAV of c. 9%, wider than the five-year average. The board has been active with share buybacks as part of their discount control approach.
The trust has recently combined with abrdn China, having completed in March. This has led to a growth in the asset base and is expected to contribute towards lower Charges going forward.
Fidelity China Special Situations PLC (LON:FCSS), the UK’s largest China Investment Trust, capitalises on Fidelity’s extensive, locally-based analyst team to find attractive opportunities in a market too big to ignore.
This article is directed towards, and intended for, readers based in the UK. The F symbol is a trademark of FIL Limited used with its permission.
