Key Morningstar Metrics for Fidelity China Fund
- : BronzeMorningstar Medalist Rating
- : Above AverageProcess Pillar
- : AveragePeople Pillar
- : Above AverageParent Pillar
This strategy remains underpinned by a solid value-oriented investment approach, though we are still building conviction in current leadership. We reiterate the strategy’s Process Pillar at Above Average and People Pillar at Average.
Leading the strategy since Sept. 30, 2022, Nitin Bajaj brings over two decades of investment experience and a well-established value discipline. However, before his assignment here, his track record was primarily rooted in Asia small caps, and he had limited experience in China large caps, which represent a meaningful portion of the strategy’s investable universe. Recent meetings point to the manager’s reasonable grasp of the opportunity set and portfolio, which is encouraging, but his stock insights have yet to clearly differentiate versus higher-rated peers, and his short and mixed track record also tempers conviction. With 13 years of experience, comanager Alice Li has supported the strategy since 2021, primarily contributing to idea generation and research, while her portfolio management experience remains nascent; she assumed her first lead portfolio management role with the Japan-domiciled Fidelity China Focus in April 2026, taking over from Bajaj.
Fidelity’s dedicated 14-member China analyst team, averaging eight years of experience, is among the largest under our coverage. However, recent turnover warrants monitoring. Three departures in 2024, partly linked to performance reviews and cost-cutting, followed by three more in 2025 and one internal promotion, reduced headcount to 14 from 17 over the period despite four hires. A gap in materials coverage emerged after the dedicated analyst’s departure in the fourth quarter of 2025, with a replacement expected in June 2026. We are watchful of the impact of this departure, given the sector’s meaningful contribution to stock selection over Bajaj’s tenure.
The investment process is clearly defined, with a value bias. Bajaj targets well-run companies led by competent management teams and typically requires a significant margin of safety relative to his assessment of fair value. He invests with an absolute-return mindset, prioritizing capital preservation, and as such tends to steer clear of crowded areas or segments characterized by rapid change and high uncertainty. Limited regard for benchmark composition often results in meaningfully differentiated sector positioning, within defined risk limits. Meanwhile, increased small-cap exposure, reflecting Bajaj’s area of expertise, and selective use of non-China holdings within a 10% cap, broaden the opportunity set and provide an additional source of alpha.
Performance over Bajaj’s still-short tenure has been mixed despite a predominantly value-led environment supportive of the strategy’s style.
Fidelity China Fund: Performance Highlights
Nitin Bajaj’s track record since taking the helm on Sept. 30, 2022, has been mixed.
Through March 2026, the Y-Acc-USD share class returned 10.64% annualized, ranking in the first quintile among China equity peers, but lagging the Morningstar China TME Index category benchmark by 25 basis points and the MSCI China Value Index by 628 basis points, despite a predominantly value-led market supportive of the strategy’s style. Risk-adjusted outcomes were stronger. Volatility was meaningfully lower than the index and median peer, helped by Bajaj’s margin-of-safety discipline, resulting in a Sharpe ratio marginally ahead of the index and over 75% of peers.
Bajaj had a strong start in the down markets of 2023. While it dipped 5.67%, it landed in the top decile among peers and outpaced the category benchmark, which fell 10.00%, amid a favorable environment for value investing. Performance weakened thereafter, with index-relative underperformance of 859 basis points in 2024 and 348 basis points in 2025 despite value tailwinds persisting. In 2024, underperformance came evenly from negative allocation and stock selection effects. The meaningful underweighting in communication services, underweighting in financials, and overweighting in real estate dragged, while stock selection detracted most within healthcare and energy names. In 2025, allocation remained a drag and outweighed the moderately positive stock selection effects, which were concentrated in consumer discretionary and materials, while most other sectors detracted. Within consumer discretionary, a key contribution came from a non-China name, Prosus, which holds a stake in Tencent. This is in line with Bajaj’s flexibility to invest up to 10% in non-China names, some of which, including Micron (US), MediaTek (Taiwan), and SK Hynix (South Korea), have contributed to performance over his tenure, although these positions have since been exited.
