Fidelity Special Values holds fast to value stocks advantage (LON:FSV)

Fidelity

Fidelity Special Values PLC (LON:FSV) has published its monthly factsheet for January 2024.

Portfolio Manager Commentary

UK equities declined in January after two consecutive months of gains. This shift was underpinned by investors recalibrating their expectations for imminent and substantial interest rate cuts from major central banks. A desire for firmer evidence that inflation is under control and lack of commitment on the timing of rate adjustments by central banks contributed to an atmosphere of uncertainty among market participants. Despite optimistic forecasts, inflation is proving stubborn in the UK, with December’s CPI rising from 3.9% to 4.0%. From a style perspective, growth stocks outperformed value stocks during the month.

While value stocks have outperformed growth stocks over the last three years, they still have significant ground to catch up. The current market environment of stickier inflation, higher interest rates and economic volatility is more aligned to the long-term pattern seen over the last 100 years. History suggests that over the long term value tends to outperform, given generally higher discount rates and a reversion to the mean. 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 attractive 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 1.4% and 2.5% respectively, compared to 1.9% 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.

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