Fidelity Special Values PLC (LON:FSV) monthly factsheet for October 2023.
Portfolio Manager Commentary
On a rolling 12-month basis, the Trust recorded NAV and share price returns of 3.2% and 0.5% respectively, compared to 5.9% for the index.
UK equities, along with other major markets, fell sharply in October due to prevailing macroeconomic uncertainties. Sentiment also took a dip as earnings announcements highlighted the impact of the more challenging economic backdrop on corporate performance, with stocks that missed expectations punished more than those that outperformed expectations were rewarded. Market fragility persisted as the annual UK inflation rate held steady at 6.7% in September, slightly higher than market expectations of a modest decline to 6.6%.
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.
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.
