These are very busy times for Alex Wright, manager of Fidelity Special Values, as he steers the £1.3 billion investment trust through troubled waters caused by the conflict in the Middle East.
Quietly, he has been adjusting the stock market-listed fund’s portfolio to make it fit for purpose in a world where higher inflation and huge economic challenges are likely to dominate the future.
‘We’ve done a lot of trading, buying and selling of stocks,’ he says. ‘But there are many companies left in the fund which sit in sectors renowned for their defensive qualities: healthcare, consumer staples, defence, tobacco and oil.’
He adds: ‘The key is to remain invested and stick with stocks, such as power giant SSE, insurer Aviva, Imperial Tobacco and pharmaceuticals giant AstraZeneca.
‘As an investment house, we believe passionately that it is time in the market that matters.
‘As a fund manager, you have to accept that the market has good and bad days. Selling on the bad days doesn’t make sense.’
The fund’s top holdings have not changed since the last time they were published by Fidelity at the end of February. But the ranking of the top ten, according to the percentage of assets they represent in the portfolio, has changed, with French oil giant TotalEnergies becoming its biggest position.
This, says Wright, is a result of the rise in the oil price, causing the company’s shares to advance by more than 16 per cent over the past month.
Despite TotalEnergies’ large presence in the portfolio, Special Values is a trust that invests primarily in the UK stock market. Some 85 per cent of its assets are in UK-listed businesses.
Besides the UK, its biggest country holding is Ireland, with housebuilder Glenveagh Properties a top ten holding. It also has a smaller stake in Cairn Homes.
Wright says: ‘Housebuilders are struggling in the UK and things aren’t going to get any easier as the cost of materials rises, consumer confidence remains fragile and interest rates start rising again. But in Ireland, the outlook for housebuilders is better.
‘House prices are rising strongly, and the market is helped by a government which provides support for home buyers.’
The fund’s exposure to UK housebuilders is 1.5 per cent.
Despite the volatile stock market backdrop impacting adversely on Special Values’ short-term performance, its long-term figures remain a solid advert for active fund management.
So over the past month, Special Values has recorded losses of 9.5 per cent, slightly more than the average for its peer group – 8 per cent – but much larger than the 3.7 per cent drop in the FTSE All-Share Index.
Analysis of the five-year numbers shows that its 73.3 per cent return is better than both the FTSE All-Share (71.7 per cent) and its peer group (16.6 per cent).
The ten-year numbers are even better, respectively 184 per cent, 135.2 per cent and 84 per cent.
Wright has had his hand on the fund’s tiller since September 2012 and is assisted by Jonathan Winton. For income-seeking investors, Special Values has 16 years of annual dividend growth under its belt. In the past financial year it paid dividends totalling 10.2p a share. The share price hovers around £4.10 and the dividend income is equivalent to an annual yield of around 2.5 per cent.
The trust’s total annual charges are 0.68 per cent, its market ticker is FSV and identification number BWXC7Y9.
Platform Interactive Investor includes it on its list of ‘super 60 investments’.
DIY INVESTING PLATFORMS
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