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Fidelity China Special Situation ups dividends; fails to beat its benchmark | Trustnet Skip to the content

Fidelity China Special Situation ups dividends; fails to beat its benchmark

10 June 2025

Manager Dale Nicholls highlights investor enthusiasm for artificial intelligence and electric vehicles.

By Emmy Hawker,

Senior reporter, Trustnet

Fidelity China Special Situations is increasing its dividends by 25% and offering a one-off special payout, according to the investment trust’s end-of-year results.

The company will up its ordinary dividends from 6.4p to 8p per share, with the additional special dividend of 1p per share coming from its position in online finance marketplace Lufax Holding.

It has also added £7.7m to its revenue reserve, which now stands at 5.6p per share, or 70% of the total dividends paid this year.

Performance-wise, the company reported a net asset value (NAV) total return of 31.5% in the 12 months to 31 March and a share price total return of 35.8%, as the discount narrowed from 10.2% to 7.3%.

However, it failed to beat its benchmark, with the MSCI China Index up 37.5% over the same timeframe.

James Carthew, head of investment company research at QuotedData, said: “It has been great to see Fidelity China’s NAV pick up a bit but we are still a long way off the trust’s high in 2021 and the NAV was this level during 2018.”

Although markets have been “rocked” by renewed US-China trade tensions since the financial year end, manager Dale Nicholls said he remains confident in the longer-term opportunities in Chinese equities.

“Performance during the year was driven largely by domestically focused small and mid-cap stocks, financials, and several of the most innovative companies held, particularly those linked to artificial intelligence (AI) and the electric vehicle (EV) supply chain,” he said.

FinTech lender LexinFintech Holdings and AI-enabled short-term consumer credit platform Qifu Technology were identified as standout performers last year, while investors’ continued enthusiasm for AI and digital transformation supported strong returns from the likes of Alibaba Group Holding.

However, the decision not to hold automakers BYD and Xiaomi – both of which are focused on growing their EV potential – detracted from the company’s performance compared to the MSCI China benchmark index, Nicholls admitted.

“However, I remain cautious given the competitive intensity in the auto sector along with relatively high valuations,” he said.

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.