Fidelity Asian Values (FAV) has announced an ambition to double its shorting capacity to 20% of AUM in response to concerns about underperformance.
In the year to 31 July, FAV achieved a share price total return of 7.8% and net asset value total return of 6.1%, against the MSCI All Country Asia Small Cap index of 9.1% – an underperformance of 3%.
This underperformance was driven by a decision to underweight Taiwanese tech stocks during a price surge in late 2025 and early 2026, causing the fund to miss out on substantial AI-related gains.
See also: The underappreciated Asia market outperforming the S&P 500
Speaking in defence of the fund’s performance, portfolio manager Nitin Bajaj said: “12 months is a short period of time over which to judge a portfolio’s performance. This should be put in the context of longer-term performance, in line with our investment horizon.”
To help address FAV’s difficulties, chair Clare Brady has asked shareholders to “amend the investment policy by increasing the maximum permitted short exposure from 10% to 20% of net assets”.
Supporting this request, Brady said that shorting “has generally been additive to the company’s performance since its introduction.
“Portfolio managers currently see a broad range of opportunities to short stocks. Their research is identifying companies where stretched valuations are not supported by the underlying fundamentals, including weak earnings quality, fragile balance sheets or structural challenges.”
However, Brady is also clear that any new shorting capacity will “not change the company’s bottom-up, value-focused investment philosophy”.
The vote will be held at the annual general meeting on 25 November 2026.
