Value investing and ESG make uneasy bedfellows

It is not controversial to suggest that it may be a more favourable moment for value stocks. After a decade where low interest rates have flattered growth stocks, their value counterparts have outpaced them by around 14% over the past 12 months. However, less widely discussed is the extent to which this may dent ESG and sustainable strategies as the environment changes.

Alex Wright, manager of the Fidelity Special Values trust, says that the outperformance of growth and the outperformance of ESG may have been conflated: “It may be that people thought ESG was adding value, but growth was the key factor. There is a huge overlap between what scores well on an ESG basis and what scores well on a growth basis.”

Fidelity Special Values PLC (LON:FSV) aims to seek out underappreciated companies primarily listed in the UK and is an actively managed contrarian Investment Trust that thrives on volatility and uncertainty.

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