Fidelity China Special Situations to double unlisted limit


Fidelity’s China Special Situations investment trust plans to double the company’s limit for exposure to unlisted companies.

Pending shareholder approval, the limit for the £764m trust will increase from 5 per cent to 10 per cent.

The investment trust was an early investor in Alibaba, which raised $25bn through its 2014 listing, the largest ever IPO.

Unlisted investments currently represented 2 per cent of assets at 31 March.

Investment trust chairman John Owen, who is stepping down next month, says: “Following the successful initial public offering of Alibaba in which the company invested from an early stage, there has been a trend for companies to raise capital in private markets and to list on a public stock exchange after their development has progressed.”

In Q3 2015, the investment trust took a position in Chinese ride-hailing app Didi in a round of financing that valued it at $16bn.

A more recent round of financing valued the app at $20bn, which was reflected in the investment trust’s net asset value, which increased 0.02 per cent compared to the MSCI China Index’s fall of 16.2 per cent for the year ended 31 March.

Associate director of investment trusts Alex Denny says the closed-ended nature helps them access a wider range of investments.

“Access to a larger universe of companies with ambitions for high growth can expand an investor’s portfolio and provide good returns whilst maintaining a diversified approach and spreading risk.”

Shareholders will vote on the proposal at the AGM on 22 July.

In April the Scottish Mortgage Investment trust changed its investment mandate to place a limit on unlisted investments, which had increased to 10 per cent of the portfolio by September. The non-listed portion of the portfolio has now been capped at 25 per cent of the total assets of the trust.