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№ 191 13 filings · 2021-12-03 → 2026-10-16

FIDELITY ASIAN VALUES PLC

FAS
Financial Services Share price 584p Market cap £366m Overall fit 290 /1000

Fair-priced quality trust with excellent downside protection but a near-complete mismatch to the investor's three pillars: it explicitly avoids AI beneficiaries (holds short positions against them), has no operating leverage (costs scale with NAV), and offers only ~1p of discount capture at today's price.

Fair value range 575p–621p Mid case · £375m
Absolute upside +2.6% vs current market cap
Conviction 4/5 confidence in fair call
Supports the call
  • Daily-marked NAV with 97% level-1 assets
  • Clean 30-year audit and disclosure history
  • NAV-based valuation methodology is near-unambiguous for closed-end funds
Limits the call
  • Discount can widen 5-10pp in style-adverse regimes
  • Small level-3 holdings (incl. ByteDance) introduce modest valuation subjectivity
Methodology

NAV with historical discount band

In one line · bull case

A fairly-priced, high-quality Asian small-cap value trust that explicitly bets against the AI theme — attractive only to investors wanting the opposite of this strategy.

In one line · biggest risk

Continued AI-led narrow-market leadership that keeps the manager's contrarian value stance out of favour and widens the discount.

Drivers
AI beneficiary 20 /100
Explicitly contrarian to AI; TSMC held but reduced, and shorts expensive AI-adjacent names.
Operating leverage 15 /100
Closed-end fund cost base scales with NAV; no fixed-cost gearing to a revenue beat.
Earnings vs expectations 45 /100
Lumpy vs index: FY24 miss, FY25 beat, 1H26 beat, FY26 miss — style-driven.
Growth momentum 50 /100
NAV TR +6.1% in FY26, dividend +7.3%; underperformed index last year.
Moat 25 /100
Modest execution edge from Fidelity's analyst platform; no structural moat.
Earnings quality 80 /100
Clean investment-trust accounting; NAV almost entirely level-1 listed securities.
Management quality 70 /100
Bajaj 10+ year track record of long-term index outperformance; Co-PM addition reduces key-person risk.
Cyclicality 60 /100
Asia ex-Japan small-caps are moderately-to-highly cyclical.
Leverage 25 /100
10.1% net gearing / 24.9% gross via CFDs; manageable but above peer average.

Fidelity Asian Values PLC (FAS) — Research Note

Executive summary

Fidelity Asian Values PLC is a London-listed closed-end investment trust that invests in Asia ex-Japan small-cap equities with an explicit contrarian/value philosophy, run by Nitin Bajaj (since 2015) and co-manager Ajinkya Dhavale. Over the five years to 31 July 2026 the Company delivered NAV and share-price total returns of +42.4% and +40.3% respectively (vs comparative index +9.1% in FY26 alone), while significantly underperforming in FY26 by actively avoiding AI-driven technology names 2026-10-16 final results. The single most important valuation point today is that the shares trade at only a ~3.1% discount to a 621.46p NAV — essentially fair-valued against net assets, with no meaningful mispricing to arbitrage.

Fair value estimate

Methodology: NAV-based valuation with a historical discount band. For a closed-end investment trust whose assets are 97% listed securities, NAV is the correct anchor. Any "fair value" is NAV adjusted for the normal trading discount.

  • Latest disclosed NAV per share (31 Jul 2026): 621.46p
  • Historical discount range in reporting period: 2.1%–8.5%; 5-year typical: 3%–10%
  • Fair value range: 575p – 621p (10% discount to par)
  • Implied market cap range: £361m – £390m
  • Current price 602p / mcap £382m → within the fair-value band
  • Absolute upside/downside vs mid (598p): ~ -1% (essentially fairly priced)

The shares offer no meaningful discount capture at today's level. The 2025 opportunity to buy at a 10–14% discount has largely closed as buybacks and improved sentiment narrowed the discount.

Sector context

Classified by ICB as Financial Services, but this is an investment company / closed-end fund — a very different animal from operating financials. Peers include Pacific Horizon IT, Schroder AsiaPacific Fund, Scottish Oriental Smaller Companies, abrdn Asia Focus, and Fidelity China Special Situations. Quality/governance is in line with peers (Fidelity is one of the stronger managers in the space); gearing (10.1% net, 24.9% gross) is above average via CFDs. Growth profile is below peers that have embraced AI/tech names.

Investment thesis (3 bullets)

  • Fidelity's deep Asian small-cap research platform is a genuine edge in an under-researched universe, with ~60 analysts in-region and a disciplined challenge process; portfolio ROE of ~17.8% vs index 10.2% while trading on 10.4x P/E vs 17.8x 2026-03 half-year.
  • The portfolio is positioned for the regime where AI-euphoria mean-reverts and value re-rates, with China and Indonesia overweights at 5–10x P/E for 15–20% ROE businesses; the manager explicitly identifies the current small-cap-growth-to-value premium as near its 1999–2000 extreme 2026-10-16 final results.
  • Capital returns and discount control are improving: 7.3% dividend increase for FY26, 4,022,699 shares repurchased since Aug 2025, and the discount compressed from 6.7% to 5.4% at year-end (now ~3.1%) 2026-10-16 final results.

Key risks (3 bullets)

  • Explicit anti-AI positioning may continue to be penalised if the AI capex super-cycle extends — the manager admits the FY26 index underperformance (NAV +6.1% vs +9.1%) was driven by reducing Taiwanese small-cap tech early in the period, and the Taiwan Small Cap Index rose 43% in Q2 2026 2026-10-16 final results.
  • Concentrated country-risk tails in China and Indonesia (overweight both), plus a proposed increase of short-exposure limit from 10% to 20% of NAV, raises the magnitude of outcomes relative to peers 2026-10-16 final results.
  • Key-person dependency on Nitin Bajaj, whose "differentiated style" the Board itself flags as intrinsically linked to the strategy; the Co-PM addition (Ajinkya Dhavale, 2024) mitigates but does not eliminate 2024-10-11 final results.

Operating leverage

Operating leverage in the sense the investor is seeking does not meaningfully exist in a closed-end fund. The cost base is primarily a 0.70% base management fee plus a +/-0.20% variable fee (0.95% ongoing charges, 0.75% including the variable element in FY26), both of which scale with NAV, not against revenue. There is no fixed-cost base to lever against a revenue surprise. The nearest analogue is gearing: at 31 July 2026 net gearing was 10.1% and gross gearing 24.9% (via CFDs); if underlying holdings re-rate materially, NAV benefits ~1.1x. The proposed increase of the gross asset exposure limit to 150% and short-book limit to 20% would modestly extend this, but these are magnifiers, not operating-leverage drivers 2026-10-16 final results. For an investor seeking long-tailed asymmetric payoffs from operating leverage, FAS fails this test.

Value-trap signals

None identified. Clean audit, no going-concern issues, consistent dividend growth, high-quality disclosure, continuation vote expected to pass at the Nov 2026 AGM, portfolio of readily realisable listed securities.

Earnings vs. expectations

Investment trusts don't publish earnings guidance in the operating-company sense; the relevant benchmark is NAV total return vs the comparative index (MSCI AC Asia ex Japan Small Cap):

  • FY24 (31 Jul 2024): NAV TR +3.2% vs index +13.7% — material miss
  • FY25 (31 Jul 2025): NAV TR +12.4% vs index +7.1% — meaningful beat
  • 1H26 (31 Jan 2026): NAV TR +10.9% vs index +8.9% — beat
  • FY26 (31 Jul 2026): NAV TR +6.1% vs index +9.1% — miss (full-year), with 2H26 giving back much of 1H gains as Taiwanese AI small-caps surged

The pattern is lumpy and style-dependent: when value works, the trust beats materially; when growth/momentum dominates (as in 2H26), it lags. Over 10 years NAV has compounded at +8.9% p.a. vs index +7.3%.

Conviction

4 — high. NAV-based valuation of an investment trust is a near-unambiguous methodology, disclosure is of the highest quality, and the trust publishes daily NAV. The fair-value range is tight (±5%). Anchors: (i) daily-marked, almost entirely level-1 asset base; (ii) 30-year governance and audit track record; (iii) transparent gearing and fee structure. Limits: (i) the discount can widen in style-adverse regimes, meaning price can diverge from fair value; (ii) a small level-3 bucket (£7.2m, including ByteDance) introduces a modest valuation subjectivity.

Filings consulted · 15

Every document the LLM read for this note. Click any row to open the source.

  1. 2026-10-16Final Results2026-10-16_9826223_final-results.md1.00
  2. 2026-10-16Dividend Declaration2026-10-16_9826214_dividend-declaration.md0.30
  3. 2026-03-30Half Year Financial Report2026-03-30_9497281_half-year-financial-report.md0.77
  4. 2025-11-26Result OF Agm2025-11-26_9259379_result-of-agm.md0.26
  5. 2025-10-17Dividend Declaration2025-10-17_9177498_dividend-declaration.md0.20
  6. 2025-03-25Half Yearly Results For The Six Months Ended2025-03-25_8795050_half-yearly-results-for-the-six-months-ended.md0.58
  7. 2024-11-21Result OF Agm2024-11-21_8565206_result-of-agm.md0.20
  8. 2024-10-11Final Results2024-10-11_8479797_final-results.md0.45
  9. 2024-10-11Dividend Declaration2024-10-11_8479793_dividend-declaration.md0.14
  10. 2024-04-09Half Year Report2024-04-09_8127147_half-year-report.md0.41
  11. 2023-11-29Result OF Agm2023-11-29_7910853_result-of-agm.md0.14
  12. 2023-04-19Half Year Report2023-04-19_7465109_half-year-report.md0.23
  13. 2022-11-23Agm Statement2022-11-23_7176556_agm-statement.md0.10
  14. 2022-04-21Half Year Report2022-04-21_6987875_half-year-report.md0.23
  15. 2021-12-03Agm Statement2021-12-03_6752151_agm-statement.md0.10

This research note was authored by a large language model after reading 13 regulatory filings published between 2021-12-03 and 2026-10-16. Each citation refers to a specific RNS announcement in the underlying data set. The note is an opinion, not advice. Do your own work before risking capital.