Fidelity Special Values PLC: UK-focused best-seller

The best-selling investment trust on Fidelity Personal Investing in July was Fidelity Special Values, which offers a very distinctive exposure to the UK stock market. Its lead manager is the highly experienced Alex Wright, who looks for undervalued companies that have the potential for a turnaround.

His stock selection decisions are based on the underlying fundamentals with the resulting portfolio typically having a bias towards the small and mid-cap end of the spectrum. The research intensive process is supported by Fidelity’s large team of analysts who specialise in this area.

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A contrarian approach

Wright and his co-manager Jonathan Winton have a contrarian approach where they look for unloved companies that are entering a period of positive change that the market has not yet recognised. This could be due to a new product line or an expansion into different business areas, or adverse factors affecting their competitors.

It is a highly disciplined process that first evaluates the downside risk and then identifies the upside potential. Their ideal investments are companies that have exceptionally cheap valuations, or some kind of asset that should prevent their share prices falling below a certain level.

What are the managers’ latest views?

The managers believe that UK stocks are cheap relative to other markets and benefit from a meaningful margin of safety that could cushion them against potential external shocks. It is likely that there will be some impact from president Trump’s tariffs, but this will mainly be from a deceleration in global economic growth rather than from a direct exposure.¹

Writing in the June factsheet, Wright said that the UK has been performing well over the past five years and remains a fertile hunting ground for contrarian stock pickers.

“We believe that the current market conditions continue to favour our contrarian value investment style. The UK market offers a rich pool of investment opportunities for diligent investors, combining strong earnings growth, high dividend yields and low valuations.”²

The underlying portfolio

At the end of June the fund had 39.5% invested in FTSE 100 stocks and 36.7% in the mid-caps of the FTSE 250, with the balance committed to the smaller end of the spectrum. It is a diversified portfolio with the top ten positions – a mixture of well-known and less familiar names − only accounting for 30% of the assets.³

Fidelity Special Values PLC - top 10 holdings

1. DCC
2. NatWest
3. British American Tobacco
4. Standard Chartered
5. Direct Line
6. Imperial Brands
7. TotalEnergies
8. Mitie Group
9. Glenveagh Properties
10. AstraZeneca

Source: Fidelity Special Values PLC factsheet, 30 June 2025

The largest sector overweights relative to the FTSE All-Share benchmark are Industrials and Consumer Discretionary, with the main underweights being Energy, Healthcare and Technology. Investors should also be mindful of the net gearing of 8.4% that effectively increases the market exposure and magnifies the potential gains and losses.⁴

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Impressive performance

Over the five years to the end of June the cumulative share price growth was an impressive 125.1%, which was well ahead of the 67.3% increase in the index. The difference is even greater over the period since the trust's launch on 17 November 1994 with gains of 3,215.1% and 761% respectively.⁵ Please remember past performance is not a reliable indicator of future returns.

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Before investing, please read the relevant key information document which contains important information about each investment trust. The shares in Fidelity Special Values PLC are listed on the London Stock Exchange and their price is affected by supply and demand. Investment trusts can gain additional exposure to the market, known as gearing, potentially increasing volatility. Overseas investments will be affected by movements in currency exchange rates. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Eligibility to invest in an ISA and tax treatment depends on personal circumstances and all tax rules may change in the future. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.