Last checked at 27 Jul 2017 13:15
Fidelity Special Values plc - Update research from QuotedData
27th July 2017
Sounding a note of caution
Fidelity Special Values (FSV) is managed with a contrarian style (it focuses on stocks which are out of favour with other investors, yet show potential for change). It benefited from the Trump reflation trade (see page 14), as value stocks (stocks that that tend to trade at low valuations relative to their fundamentals) rallied strongly, but, as the market has reset its expectations, value has moved out of favour as investors have refocused on growth. With market valuations close to all-time highs, FSV's manager, Alex Wright, is sounding a note of caution.
The trust's natural level of borrowing is around 10% of net assets, but Alex has moved the portfolio to a circa 3% net cash position. However, Alex believes it is still possible to deliver positive returns in environments that do not favour value and, despite this more cautious stance, FSV's portfolio has an overweight exposure to cyclical stocks and an underweight position in what Alex sees as expensive defensive stocks, which he believes will suffer as interest rates start to rise.
Full research:
http://quoteddata.com/2017/07/fidelity-closed-end-funds-review/
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