Fidelity Special Values PLC (LON:FSV) monthly factsheet for July 2023.
Portfolio Manager Commentary
UK equities posted positive returns in July following global markets higher. In a reversal of sentiment from last month, we saw strength in domestically focused areas of the market as weaker-than-expected inflation data tempered expectations on how aggressively the Bank of England will need to raise rates and
squeeze mortgage holders over the coming year. From a sector perspective, the rate-sensitive real estate sector was the best performer, following a downside surprise in UK inflation. Conversely, sectors perceived as defensive such as health care, utilities and telecommunications underperformed.
The relative attractiveness of UK valuations versus other markets and the large divergence in performance between different parts of the market continue to create good opportunities for attractive returns from UK stocks on a three-to-five-year view. The smaller end of the market cap spectrum is particularly rich in investment opportunities given the lack of research coverage. For us, this has always been a big structural overweight, and is an area where we are finding opportunities at the moment. Smaller companies have
incurred severe deratings over the past year, however some of the share price drops, in our opinion, have been indiscriminate.
On a rolling 12-month basis, the Trust recorded NAV and share price returns of 4.9% and 1.7% respectively, compared to 6.1% 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.
