Fidelity Special Values, a UK investment trust known for its contrarian approach, aims to deliver long-term capital growth by focusing on special situations such as mergers, acquisitions, spin-offs, distressed debt, and liquidations. The trust, which has a history stretching back more than three decades, seeks opportunities in undervalued companies undergoing positive change that has yet to be recognized by the wider market.
Originally managed by Anthony Bolton, the trust gained a reputation for rigorous fundamental analysis and strategic insight during his 13-year tenure. Under Bolton, the fund’s share price increased more than fivefold, significantly outperforming the FTSE All-Share index, which rose by 112 percent over the same period. Since 2012, Alex Wright has led the fund, maintaining a disciplined, bottom-up investment approach that focuses on identifying turnaround stories across various stages of recovery.
Wright emphasizes a collaborative effort with Fidelity’s analyst team to assess downside risks and build conviction in potential growth opportunities. The current portfolio has an 88 percent exposure to UK equities, with major holdings concentrated in financial and energy sectors. Top positions include DCC Energy, Standard Chartered, Lloyds Banking Group, Total Energies, and Aviva.
Market conditions have presented a mixed backdrop for UK equities, with the FTSE 100 near record highs and UK stocks trading at a meaningful discount compared to other major global markets. While large-cap stocks have driven much of the market strength, smaller and mid-cap firms have begun to close the performance gap this year, offering fertile ground for contrarian strategies like those employed by Fidelity Special Values.
Wright noted in August that ongoing takeover activity and share buybacks have provided support for the market, with opportunities among companies such as Bunzl, Glencore, and recruiters including Hays and SThree. The trust recently experienced strong performance, with its share price advancing from 286 pence in March 2024 to 470 pence, aligning closely with its net asset value.
Despite this robust run, investors may consider their positions carefully amid uncertainties including the broader outlook for the London market, forthcoming budget policies, and wider economic factors. Fidelity Special Values has demonstrated a consistent track record of delivering returns and increasing dividends over 16 years, supporting its appeal as a long-term holding.
The trust charges an ongoing fee of 0.68 percent and currently offers a dividend yield around 2 percent. While it remains a solid candidate for investors seeking exposure to UK equities with a value-oriented focus, there is some caution that recent gains may have outpaced underlying market developments.