Fidelity Special Values PLC (LON:FSV) has published its monthly factsheet for May 2024.
Portfolio Manager Commentary
UK equities maintained their upward trajectory in May. Early in the month, market participants responded to a slew of dovish data from the US, including April’s non-farm payroll data, which indicated that employers slowed hiring; and the Consumer Price Index (CPI) report, which showed the lowest core CPI increase this year. However, by mid-May, the market rally began to falter. This shift was largely due to more resilient economic data and stronger-than-expected inflation figures, leading investors to factor in a slower pace of rate cuts. On the policy front, the Bank of England maintained its key interest rate at 5.25%, the highest since 2008, as anticipated.
While economic and geopolitical uncertainty is likely to continue, the UK’s cheap valuations compared to historical averages and other markets, and the large divergence in performance between different parts of the market, mean that we are finding attractive opportunities on a three-to-five-year view. The unloved status of UK equities means that we not only continue to find overlooked companies with good upside potential across industries and the market cap spectrum, but we also do not have to compromise on quality. Our focus on picking good-value companies means the Trust trades on a far lower average price/earnings ratio than many peers as well as the FTSE All Share Index.
On a rolling 12-month basis, the Trust recorded NAV and share price returns of 20.1% and 19.0% respectively, compared to 15.4% for the index.
