Fidelity Special Values delivered a 48 percent return this year, according to a fund review.
With a strong long-term track record, this trust is well-positioned to profit from any value play in the UK market in the medium to long term.
With a history spanning more than 150 years, investment trusts are often regarded as one of the industry’s best-kept secrets, with proponents touting historically lower fees, a better investment structure, and, in some cases, significant outperformance.
Investment trusts differ from ‘open-ended’ funds in several ways: there are a limited number of shares available for purchase; market sentiment can influence share price; the product is overseen by an independent board; and money can be borrowed to invest more.
Gearing is the term for this last component.
This week’s fund review is on Fidelity Special Values, one of the most well-known trusts among UK investors, with a nearly three-decade track record.
The trust, which was established in 1994 under the leadership of Anthony Bolton, arguably the most well-known UK investor of his time, focuses on undervalued UK companies, though it can invest up to 20% overseas.
Alex Wright and Jonathan Winton are the current trustees.
Alex joined the firm as a manager in September 2012 and has over 20 years of experience in the UK and European equity markets.
In February 2020, Jonathan was named as the trust’s co-manager.
The investment style of Alex and Jonathan is best described as contrarian.
They look for undervalued companies with strong fundamentals that have yet to be recognized by investors.
As growth companies, such as technology firms, have reached new highs, aided by low interest rates and other accommodative monetary policy, this value-style of investing has struggled over the last decade.
This hasn’t stopped the trust from outperforming the stock market in the United Kingdom.
The trust has returned 67.9%* over five years and 295.5%* over ten years, compared to 34.9%* and 113.5%* for the FTSE All Share, respectively.
Managers look for stocks that are out of favor based on two criteria.
The first goal is to protect investors’ money, which the managers hope to achieve by selecting companies with unusually low valuations or assets with the potential to limit risk, such as intellectual property or inventory.
UK news summary from Infosurhoy.
Fidelity Special Values delivered a 48 percent return this year, according to a review of the fund.
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Fund review: How Fidelity Special Values delivered a 48percent return this year
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of Juliet Schooling Latter, research director at FundCalibre, and do not constitute financial advice.