Fidelity: Capturing Asia's structural winners through market cycles

Asian equities have continued to benefit from strong technology leadership and growing enthusiasm for artificial intelligence opportunities. Portfolio manager Teera Chanpongsang outlines why a long-term mindset, anchored in bottom-up stock selection, fundamental research and on the ground insights, continues to identify high quality businesses with durable earnings profiles that are well positioned to deliver attractive returns over time.

Key points

• The fund has outperformed its benchmark across all standard periods, with long-standing conviction positions in leading semiconductor and technology businesses benefiting from accelerating AI-related demand.
• Our focus remains on identifying high-quality businesses with durable competitive advantages, strong management teams and attractive long-term earnings growth, rather than chasing short-term market trends.
• While AI remains an important driver, the portfolio is diversified across high-quality businesses benefiting from technological progress, evolving consumption patterns and supportive long-term structural trends across Asia.

Asia ex-Japan equities delivered solid returns over the past month, supported by continued enthusiasm for artificial intelligence opportunities and ongoing investment in technology infrastructure. South Korea and Taiwan led market performance as AI-related demand for servers and memory chips supported robust earnings growth and positive forward guidance from the region's leading semiconductor companies. Meanwhile, market performance elsewhere was more mixed, with profit-taking in China and weaker returns in India amid higher global bond yields and foreign investor outflows.

Against this backdrop, the portfolio continued to deliver strong relative performance, benefiting from its long-standing exposure to technology leaders across the AI value chain. The fund has outperformed its benchmark across standard periods and has returned to the top quartile of performers among its peers.

Investing in Asia’s technology leaders

The recent strength in performance reflects a long-standing investment philosophy that has remained unchanged through different market environments. We continue to focus on identifying high-quality businesses with durable earnings profiles and strong franchise characteristics, seeking companies that can deliver attractive long-term growth through different market environments. This approach has been particularly rewarding in the current environment.

The portfolio's long-standing exposure to leading technology businesses across the AI value chain has been a significant driver of recent performance. Core holdings such as SK Hynix and Samsung Electronics have benefited from growing demand for AI-related memory and semiconductors, while Samsung Electro-Mechanics and MediaTek have participated in rising investment across the broader AI ecosystem. These positions reflect years of fundamental research and conviction in businesses with strong competitive advantages, rather than short-term market opportunities.

SK Hynix and Samsung Electronics remain key holdings, supported by increasing memory requirements across data centres and enterprise markets. Alongside these positions, MediaTek continues to benefit from growing opportunities in application-specific integrated circuits, while Samsung Electro-Mechanics is well placed to capitalise on demand for components used in next-generation AI infrastructure. The portfolio also maintains a meaningful holding in TSMC, whose leadership in advanced semiconductor manufacturing continues to position it at the centre of the AI investment cycle.

While technology remains an important source of opportunity, the portfolio is diversified across high-quality businesses benefiting from broader structural growth trends across Asia. The portfolio remains overweight technology, communication services and consumer discretionary sectors, while recent additions including CATL, Samsung C&T and Shanghai Conant Optical reflect a continued search for companies with strong franchises, attractive growth prospects and resilient earnings potential.

Staying disciplined

While geopolitical uncertainty and market volatility are likely to remain features of the investment landscape, company fundamentals remain at the heart of the investment process. The portfolio continues to be managed through bottom-up stock selection, fundamental research and on the ground insights, with a preference for high-quality businesses with resilient earnings profiles.

As the AI investment cycle evolves, distinguishing the genuine beneficiaries from businesses whose earnings prove less sustainable will become increasingly important. Understanding which companies have the financial resources to maintain investment at scale, and which suppliers can convert this into sustainable growth, will be critical.

Against this backdrop, rigorous research remains essential. Supported by Fidelity's extensive research capabilities across Asia, the portfolio remains well positioned to identify businesses with strong franchises, resilient earnings and attractive growth opportunities.

Fidelity Asia Fund W Accumulation Shares vs. MSCI AC Asia ex Japan Index (Net): 

Rolling 12-month returns, net of fees, GBP (%)

Source: Fidelity International, 31 May 2026. Basis: bid-bid, income reinvested in GBP, net of fees for FIF Asia Fund W Accumulation share class. The fund’s primary share class according to the IA is shown. Index: MSCI AC Asia ex Japan. Holdings can vary from those in the index quoted. For this reason, the comparison index is used for reference only.