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Fidelity Special Values PLC on Monday said that current market conditions continued to favour its investment style, as its interim net asset value total return was in line with its benchmark. Fidelity Special Values is a contrarian investor in ‘unloved’ UK companies ‘entering a period of positive change’. On Monday, Portfolio Manager Alex Wright said: ‘The unpopularity of the UK market has made it an attractive hunting ground for contrarian value investors. We believe that the combination of favourable valuations and the large divergence in performance between different markets provides a strong opportunity for attractive returns on a three-to-five-year view. Their unloved status means we are finding overlooked companies with good upside potential across industries and the market cap spectrum.’ The company said net asset value per share dipped 0.1% to 352.61 pence each as at February 28, from 352.84p at August 31. NAV total return for the six months to February 28 was 5.2%, in line with its benchmark, the FTSE All-Share index. Fidelity Special increased its interim dividend by 3.7% to 3.36p from 3.24p a year ago. Looking ahead, Portfolio Manager Wright said that UK equities remain relatively cheap compared to other markets despite their performance having improved recently. ‘Historically, the UK market traded at around 85-90% of global markets, but this has dropped to around 75% in recent years. While other markets face excessive valuations and the risk of a de-rating, the UK market benefits from a meaningful margin of safety, offering protection if exogenous events impact markets. The market’s consensus last year was that US dominance would persist; however, trends have moved in the opposite direction so far this year,’ he said. Wright added: Overall, we believe the UK market has an underappreciated richness of opportunity, combining strong earnings growth, high dividend yields and low valuations. The portfolio benefits from a favourable upside/downside profile and our holdings trade at a meaningful discount to the broader UK market, despite exhibiting resilient earnings, superior returns on capital and relatively low levels of debt. This quality profile reinforces our confidence in delivering attractive long-term returns for investors.‘ Fidelity Special shares were 0.8% higher at 331.09 pence each on Monday morning in London, giving it a market capitalisation of £1.07 billion. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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