Fidelity Special Values (FSV), the best performer in the admittedly small pool of UK All Companies investment trusts, underlined its supremacy today with annual results showing a 14.3% underlying investment return in the year to 31 August.
Good blue chip stock picks and sector positioning in banks, tobacco and life insurers by Fidelity fund managers Alex Wright and Jonathan Winton saw total growth in net asset value from the £1.3bn trust beat the FTSE All-Share’s 12.6% total return by a creditable 2.3%.
Shareholders did even better, receiving a 21.8% total return as investors warmed to UK equities with the discount – or gap – between the trust’s share price and the value of its investments narrowing from 8.4% to 3.1%.
The total return to shareholders includes the semi-annual dividends which, with a 6.84p per share final dividend declared today brings the year’s total to 10.2p, up 6.9% on last year.
Chair Dean Buckley, who is stepping down after 10 years on the board, said returns had been both positive and ahead of the index in four of the past five years. That had built a cumulative total NAV investment return of 124.3% that underpinned a 140.4% total return to shareholders which was nearly double the FTSE All Share’s 77.7%.
“In a world where the investment headlines are often dominated by the ‘AI revolution’ in general, and US technology stocks in particular, shareholders may also be pleasantly surprised to know that the company has also substantially outperformed the 87.5% sterling total return from the Nasdaq [technology] index over the same period,” he said.
Doubtless, the weakness of the dollar against the pound this year will have helped this comparison but Fidelity Special Values has done well. The latest five-year performance data show it leads its five-strong sector with a 147.4% total return to shareholders, that is well ahead of second-placed Schroder UK Mid Cap (SCP) on 61%.
Our view
Matthew Read, senior analyst at QuotedData, said: “This is another strong set of results for FSV, underscoring the effectiveness of its contrarian, value-driven approach, which has outperformed the benchmark in four of the last five years. Outperformance was again driven by stock selection and timely positioning in favoured sectors such as banks, tobacco and life insurance, and achieved despite a meaningful underweight to large caps, which led the UK market over the period.
“While UK equities have recovered some lost ground and valuations have edged up, FSV’s portfolio continues to trade at a notable discount to the wider market – offering both upside potential and a cushion should sentiment soften. Clearly, returns from this style can be uneven, but the longer term record speaks for itself: five-year cumulative NAV and share price total returns of 124.3% and 140.4%, respectively, compared with 77.7% for the All-Share. FSV’s ability to find value in overlooked corners of the UK market continues to reward patient investors and demonstrates that strong returns remain achievable even in an unloved asset class.”
