In focus
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This trust’s manager Nicholas Price is moving into
Japanese tech stocks on “trough valuations”
Fidelity Japan
FE TRUSTNET
towards the lower end of the market
cap spectrum than many of its peers.
The trust has made 119.44 per cent
since Price became manager at the
start of 2015 compared with 73.12
per cent from its Topix benchmark
and 81.69 per cent from the IT Japan
sector average.
FACT BOX
MANAGER: Nicholas Price / LAUNCHED: 15/03/1994 / PREMIUM/DISCOUNT: -10.35%
/ OCF: 1.06%
FE CROWN RATING
PERFORMANCE OF TRUST UNDER MANAGER
VS SECTOR AND INDEX
Fidelity Japan Trust
(119.44%)
IT Japan
(81.69%)
TSE TOPIX
(73.12%)
140%
120%
100%
80%
60%
40%
20%
0%
b
-20%
(auto-related semiconductors)
to his top-10 holdings on “trough
valuations”. The portfolio now has
19.4 per cent of its assets invested
in companies that make electrical
appliances and another 13.2 per cent
in telecom, media & technology.
Price’s process involves conducting
about 400 company meetings a year,
assessing their barriers to entry,
valuations, liquidity, and upside and
downside potential.
Analysts at Edison said the manager
prefers businesses with strong brands
and competitive positions with scope
for international expansion.
“The majority of the portfolio is
made up of companies that are
growing their sales and profits above
average for their industry, supported
by secular growth trends,” they added.
“However, a smaller proportion is
in turnaround situations that have
T
he Japanese tech sector
took a tumble last year when
concerns about the US/China
trade war hit the global market. In
particular, semiconductor stocks fell
50 per cent from their 2017 peak.
However, Nicholas Price, manager
of the Fidelity Japan trust, cautions
investors against confusing
correlation with causation.
The manager is unconcerned about
the recent setback for the sector –
after its peak in 2018 he believes it will
bottom out in the third and fourth
quarters of 2019, meaning now could
be an attractive buying opportunity.
As a result, he said the biggest
thematic change in his portfolio over
the past year has been a shift towards
the “steady, consistent growers”
in the tech sector, adding Tokyo
Electron (semiconductor production
equipment) and Renesas Electronics
suffered a temporary setback and are
trading at historically low valuations.”
Fidelity Japan changed its name
from Fidelity Japanese Values in May
2018 as it switched its focus away from
just small and mid cap stocks and
towards an all cap strategy. However,
the trust retains a higher exposure
Source: FE Analytics
trustnet.com