Fidelity Special Values PLC (LON:FSV) has published its monthly factsheet for July 2024.
Portfolio Manager Commentary
After a brief pause in June, UK equities resumed their upward trajectory in July. The conclusion of the UK elections, resulting in a widely anticipated Labour majority, had little immediate market impact, as investors had already priced in this outcome. Labour’s landslide victory is expected to result in improved political stability. The new government has indicated it would uphold fiscal discipline and work towards improved relations with the European Union, fostering a positive market sentiment. The domestically-biased FTSE 250 and FTSE Small Cap indices posted strong gains in July.
Despite the improved performance of the UK over recent years, UK equities still look cheap relative to other markets, and reasonable on an absolute basis. We continue to believe that the combination of attractive valuations and the large divergence in performance between different parts of the market create good opportunities for attractive returns from UK stocks on a three-to-five-year view. Their attractive valuations are being recognised by market participants such as overseas corporates and private equity firms who have been amongst the biggest bidders in the UK market. Our holdings continue to trade at a meaningful discount to the FTSE All Share, despite resilient earnings, superior returns on capital and relatively low levels of debt.
