Fund Spotlight: outperformer that’s capitalising on rally

The stock markets of Taiwan and South Korea have been among the best-performing globally over the 12 months to 31 May 2026, delivering returns of around 120% and 240%, respectively. 

Investors seeking exposure to these fast-growing Asian economies can access them through funds in the Investment Association (IA) Asia Pacific Ex Japan sector. The sector has delivered an impressive 51.8% return over the period, making it the second-best performing IA sector behind only IA Technology.

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One fund that has benefited from this backdrop is the Fidelity Asia W Acc (B6Y7NF4) fund, managed by the experienced Teera Chanpongsang and supported by Fidelity’s extensive team of regional analysts. The fund invests in companies across Asia, excluding Japan, and is benchmarked against the MSCI All Country Asia ex Japan Index.

Despite the strong gains seen across Asian equity markets, valuations remain relatively attractive. The MSCI Asia Pacific ex Japan Index currently trades on a price-to-earnings ratio of around 13.5 times, compared with approximately 22 times for the US market. 

This valuation gap suggests that there may still be scope for further upside should the structural drivers supporting Asian equities, including technological innovation, growing domestic consumption and the continued expansion of artificial intelligence (AI) infrastructure, remain intact.

What does the fund invest in?

The fund takes a bottom-up investment approach, meaning stock selection is driven by company fundamentals rather than broader economic trends. 

The investment team seeks to identify companies trading below their intrinsic value, with strong business models, high-quality management teams and prudent accounting practices. In particular, the managers focus on three categories of companies: strong franchises with dominant market positions, growth businesses with improving earnings prospects, and value opportunities where there is potential for a future re-rating.

Risk management is a key part of the investment process. The managers aim to strike an appropriate balance between risk and return, with limits in place on both sector and country exposures. Positions are typically constrained to a maximum 10% overweight or underweight relative to the benchmark, while individual holdings are generally capped at 10% of the portfolio. While diversified across 76 holdings, just over half of the portfolio is invested in the fund’s top 10 positions, reflecting the managers’ conviction in a select group of companies.

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The fund’s current positioning reflects where the managers see the most attractive opportunities across Asia. Technology is the largest sector allocation at 56% of the portfolio and represents the fund’s largest overweight position (+8% versus index). 

Three key positions account for nearly 30% of the allocation and include, the fund’s largest position, Taiwan Semiconductor Manufacturing Co Ltd ADR (NYSE:TSM) (9.6%). This remains the world’s biggest contract chip maker and a key part of the global technology supply chain. Samsung Electronics Co Ltd DR (LSE:SMSN) (9.3%) is another core holding. The South Korean technology company is a global leader in memory chips and consumer electronics. SK Hynix (8.1%), another leading memory chip manufacturer, has also been a key beneficiary of the AI theme.

The fund maintains meaningful exposure to financials (13.9%), with a particular preference for Indian private sector banks. One example is ICICI Bank Ltd ADR (NYSE:IBN), which the managers believe is well positioned to benefit from India’s long-term economic growth and increasing demand for banking services.

How has the fund performed?

Chanpongsang has built a strong long-term track record since taking over as lead manager of the strategy in 2014. Over the past 10 years, the fund has delivered an annualised return of 14.2%, outperforming both its benchmark, which returned 12.2% per year, and the Morningstar Asia ex Japan Equity sector average of 10.6%.

Performance has not been without its challenges, however. Between 2021 and 2023, the fund underperformed as investors favoured more value-oriented areas of the market, creating a difficult backdrop for the strategy’s focus on quality growth companies. While growth stocks rebounded in 2024, the fund again lagged both the benchmark and many of its peers, with stock selection within the financials and technology sectors weighing on returns.

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More recently, performance has improved markedly. The fund enjoyed a strong 2025 and that momentum has continued into 2026, with the strategy returning 87.6% over the 12 months to 31 May 2026.

While the recent rally has been driven by a relatively narrow group of technology stocks, the fund’s longer-term record demonstrates the managers’ ability to identify attractive growth opportunities across the Asian market cycle.

Source: Morningstar Total Returns (GBP) to 31 May 2026.

Why are we highlighting this fund?

Against a backdrop of ongoing geopolitical uncertainty, including continued tensions in the Middle East, Asian equity markets remain sensitive to shifts in global risk sentiment.

The fund is managed with a long-term mindset and remains anchored in detailed company analysis, supported by Fidelity’s regional research platform and insights from company meetings. Structural themes such as AI investment, digitalisation and rising living standards across Asia remain key drivers of portfolio positioning.

Looking ahead, Asia is expected to continue playing an important role in global economic growth, supported by its leadership in technology supply chains, favourable demographics and ongoing shifts in consumer behaviour. In this context, the fund’s approach aims to capture these long-term structural trends through selective exposure to companies best placed to benefit.

The strategy is available at an ongoing charge of 0.92%, placing it competitively relative to its sector peers.

The fund’s instrument page can be viewed here.

Please note, the fund highlighted was selected using the Highly Rated Funds Tool. For more investment ideas, visit The Highly Rated Funds - ii. The information provided should not be considered a personal recommendation.