Impressive returns for Fidelity Special Values ​​in 2024

Fidelity Special Values ​​(FSV) has published its annual results for the year ending 31 August 2024. The company delivered a NAV total return of 24.1% and the share price’s total return of 24.3%, comfortably ahead benchmark index return of 17 per cent. The company also announced that board have recommended a final yield of 6.30 pence per share, which together with the temporary dividend payment of 3.24 pence per

Regarding the performance, the manager noted that portfolio has had exceptionally strong earnings overall, and results have benefited from an improved trading outlook. The stronger economic backdrop has also meant that the share prices of FSV’s more economically sensitive small and midcap holdings have started to recover from a tough 2022-23 period.

Chairman Dean Buckley commented on the performance and outlook for the trust:

“While geopolitical challenges remain, from the conflict in the Middle East and the war in Ukraine to the upcoming US presidential election, there is a growing sense that from an economic and market point of view things are beginning to return to some form of ‘normalcy’. . Increased rates after Covid on inflation across developed markets has moderated significantly, and monetary policy is beginning to follow suit, while expectations for economic growth tend towards a more ‘soft landing’ scenario than might have been the case this time last year. All these factors would normally point to a more favorable backdrop for equity investment, and some of the major stock markets – from the US to Japan – have indeed reached new highs in the year under review, albeit not without some volatility.

“While investors’ attention may have largely been captured by US tech stocks, particularly those related to artificial intelligence, there has been a quiet renaissance in the still-unloved UK stock market, with the FTSE All-Share Index (benchmark) producing a very creditable total return of 17.0% in the 12 months to 31 August 2024. It is therefore particularly pleasing to be able to report another year of better performance from your company with a total return on net asset value (“NAV”) of 24.1 % and a total return on the share price of 24.3%.

“One of the things that sets your company apart is your portfolio managers’ focus on opportunities across the market cap spectrum. Perhaps unusually, there was not a single area in the UK market in the year’s results, with a total return of 16.9% for the large company. FTSE 100 Index17.3% for the mid-cap FTSE 250 index and 18.7% for the FTSE Small-Cap index. This gives some context to your company’s performance, with positive contributions from across the board, from banking giant NatWest Group to mid-cap support services stock Babcock International Group and Irish housebuilder Glenveagh Properties. You can find out more about the contributors to performance in the portfolio managers’ review below.

“The UK equity market, which has been largely out of favor on the international stage since the Brexit vote in 2016, continues to trade at a significant level. assessment discount to some other major developed markets, notably the US. A key element of your company’s investment approach is to identify quality companies with lower valuations than similar companies in the UK market. Thus, while a more positive backdrop could see investor attention return to the UK and push valuations up overall, the cheaper companies preferred by your portfolio manager could see a further tailwind.

“Obviously, equity investing is a long-term endeavor and one year’s outstanding performance should not be seen in isolation. Alex Wright has now been your lead portfolio manager for 12 years and is pleased to report that he has outperformed the benchmark in eight of those 12 year and generated a total NAV return of +272.2% and a total equity return of +305.5% Over this period an investment of £1,000 would have returned £3,055 with reinvested dividends.

“Alex has been supported since 2020 by co-portfolio manager Jonathan Winton. Jonathan and Alex share the same contrarian value-based philosophy and process and have worked closely together for more than a decade since Jonathan became co-manager of the open-end Fidelity UK Smaller Companies- fund in 2013. He has been the lead manager of this fund since 2014, and was awarded the Investment Week Fund Manager of the Year award in the UK Smaller Companies category in July this year.While Alex has the final say on buying and selling ideas for your company portfolio, Jonathan’s wealth of expertise in smaller companies means he is a key contributor to such ideas, and the two often attend company meetings together.”

FSV: Impressive returns for Fidelity Special Values ​​in 2024