Fidelity China trust proposes policy shift as NAV held flat in stormy market

2nd Jun 2016 10:20

(ShareCast News) - Fidelity China Special Situations' upped its dividend by more than a third after maintaining net asset value over the year to end-March, a major outperformance of its benchmark during a hugely volatile period.The FTSE 250-listed investment trust also proposed changing its investment policy to allow it to invest a higher proportion of funds in unlisted companies.NAV per share total return was up 0.02%, which was an outperformance of 16.19% against the MSCI China Index.In the same time the share price total return was down 4.5%.The board recommended lifting the dividend to 1.8p, up 38.5% from the previous year's 1.3p.The outperformance was "largely through skilful stock selection", according to chairman John Owen.Currently FCSS is limited to investing a maximum of 5% of gross assets in unlisted securities issued by companies which carry on business, or which have significant interests, in China or Hong Kong.It has proposed increasing this maximum to 10%, which it said would allow the manager "to react quickly if investment opportunities occur"."Following the successful initial public offering of Alibaba in which the Company invested from an early stage, there has been a trend for companies to raise capital in private markets and to list on a public stock exchange after their development has progressed."Dale Nicholls, the portfolio manager, said he remained convinced that the Chinese middle class would continue to grow in wealth and in number.This view has dictating his investment strategy, with much of the company's funds invested in businesses providing goods and services to the rising Chinese consumer market."However, I also look for undervalued opportunities whether in the SOE (state-owned enterprises) sector or in oversold parts of the market. Given the investment opportunities in China, I remain confident in our ability to grow the NAV of the Company over the medium-term," Nicholls added.