Nitin Bajaj: this market rally has legs

After years of lagging growth stocks, some scepticism from investors about the recent rally in value is justified. However, Nitin Bajaj tells Citywire’s Gavin Lumsden that he believes the rally has legs. “In the year 2000, we were already six months into the style rotation out of growth into value and people were still questioning whether growth was going to come back... my sense is that this time, it’s going to be very similar.” He expects the trend to continue for “a few years at least”.

Bajaj has been running the Fidelity Asian Values (LSE: FAS) investment trust – which specialises in small-cap value stocks – since 2015. The fund holds around 100 stocks out of a possible 18,000 and Bajaj keeps around 20% of the fund in large stocks in order to “manage my liquidity”. In the past five years the share price has gained around 94%, underperforming the benchmark index at 114%, although as Lumsden notes, it has beaten its rivals in the same sector.

One trend Bajaj likes now is “toll roads of technology”. Rather than try to pick specific winners in the consumer product area, he buys the stocks that underpin the whole sector. For example, he owns chipmakers SK Hynix and Taiwan Semiconductor (TSMC). Whichever phone wins the most market share, the chips inside it will be made by one of these firms. “You’ll never get the same upside that you can in a product company because a product can become a hit, but a product will also, most likely fail over time. TSMC doesn’t fail.”

MoneyWeek

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