Fidelity Special Values PLC (LON:FSV) has published its monthly factsheet for October 2023.
Portfolio Manager Commentary
UK equities rose over the month amid a broad-based global rally on signs that inflation may have reached a tipping point in developed markets, with recent data strengthening investors’ expectations of a pause in the current monetary tightening cycle. The UK also witnessed a notable drop in annual inflation to 4.6% in October, undershooting the Bank of England’s forecasts and marking the lowest reading since October 2021.
While there is increasing talk of a soft landing, there is considerable historical evidence on the impact of monetary tightening to keep us cautious on company prospects in the near term. We remain selective and favour companies with lower levels of debt and the resilience to navigate the uncertainty. We are wary of stocks where fundamentals and margins have been strong. UK equities are currently pricing in extreme pessimism and, as a result, trade at a significant discount to other markets. While value stocks have outperformed growth stocks over the last three years, they still have significant ground to catch up. We, therefore, believe that we are in the very early stages of a long-term rally in value stocks, and that the UK market with its high dividends and low valuation offers a better prospective return than many other asset classes, including global equities.
On a rolling 12-month basis, the Trust recorded NAV and share price returns of 2.0% and 0.4% respectively, compared to 1.8% for the index.
Fidelity Special Values PLC (LON:FSV) aims to seek out underappreciated companies primarily listed in the UK and is an actively managed contrarian Investment Trust that thrives on volatility and uncertainty.
