Fidelity Special Values Plc (LON:FSV) offers a differentiated approach to the UK equity market…
Overview
Fidelity Special Values (FSV) has been the stand-out performer in the AIC UK All Companies sector over the past five years. Portfolio manager Alex Wright and co-portfolio manager Jonathan Winton take a contrarian approach to the market, seeking undervalued companies across the full market-cap spectrum that have the potential for a turnaround. This strategy has delivered strong returns over the period, with the trust outperforming its four sector peers and FTSE All-Share benchmark by a considerable margin.
The trust has also outperformed the benchmark over the past 12 months, despite a challenging market environment marked by trade tensions, in which UK equities have shown stronger resilience than their global peers. In light of potentially subdued global growth, Alex and Jonathan have increased exposure to areas of the UK equity market they believe could better weather the storm. They have increased exposure to companies that are more closely tied to the domestic economy, such as Frasers Group, which was added toward the end of last year.
Alex and Jonathan are also encouraged by improving corporate earnings and consider valuations to remain attractive, with UK equities trading at a discount to other major equity markets and FSV’s portfolio offering even more attractive valuations than the index. However, the extent to which corporate earnings are impacted by the uncertain environment is unclear. As a result, Gearing has marginally increased to 6.0% (as of 30/04/2025), up from 5.2% a year before, reflecting the opportunity set they are seeing.
FSV also raised its Dividend for the 15th consecutive year during its 2024 financial year, reinforcing its position among the AIC’s next generation of dividend heroes. Based on our estimates, FSV offers a historic yield of approximately 2.8%.
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.
