Fidelity Special Values PLC (LON:FSV) monthly factsheet for September 2023.
Portfolio Manager Commentary
UK equities posted gains in September and outperformed most other developed markets thanks to the comparatively large exposure to the mining, energy and financial sectors, all of which performed well during the month. The impact of higher interest rates began to become apparent, resulting in lower inflation and consumption readings. UK inflation eased more than expected to 6.7% in August, the lowest reading since February 2022. In response, the Bank of England kept its policy interest rate unchanged at 5.25%, after 14 successive rate hikes, with Governor Andrew Bailey indicating that he expected inflation to continue to fall but there was no room for complacency.
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. 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.
On a rolling 12-month basis, the Trust recorded NAV and share price returns of 16.5% and 17.0% respectively, compared to 13.8% 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.
