UK investment trust, Fidelity Special Values PLC (LON:FSV) monthly factsheet for May 2023.
Portfolio Manager Commentary
UK equities gave back some of their recent gains in May with US debt ceiling concerns, disappointing Chinese economic data and sustained inflationary pressures all contributing to a weaker month. Commodity prices also came under pressure in view of weaker growth indicators in China, adding further pressure on the UK’s commodity-heavy indices, which as a result lagged their US and European counterparts. This was also reflected in the underperformance of the FTSE 100 versus the FTSE 250 and FTSE Small Cap indices.
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. Smaller companies have incurred severe deratings over the past year as they are thought to be more cyclical and thus more susceptible to an economic slowdown or recession. However, some of the share price drops, in our opinion, have been indiscriminate. 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 -0.2% and -2.4% respectively, compared to 0.4% 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.
