A world of investment trust opportunities
There are various vehicles that allow you to pool your money with other people. However, investment trusts are the most established on the market, having been around for over 150 years. By investing collectively with other investors, you can benefit from an expert team of professional fund managers. And by picking and choosing investment trusts (also known as investment companies) to meet your needs, you’ll be able to construct a broad, diversified portfolio that extends around the world. In this guide, we’ve brought together some key information about investment trusts, as well as insights from the managers of Fidelity’s six investment company offerings. We hope you find it useful.
This is for investment professionals only and should not be relied upon by private investors.
Fidelity Emerging Markets Limited
An active, ‘go anywhere’ approach to emerging markets
Seeking good businesses, run by good people, at a good price
Fidelity Asian Values PLC
China: a market that’s too big to ignore
Fidelity China Special Situations PLC
Seeking out strong and sustainable dividend payers across Europe
Fidelity European Trust PLC
Spotting untapped potential in small and mid-sized companies
Fidelity Japan Trust PLC
Looking at UK markets differently
Fidelity Special Values PLC
Learn more about Fidelity International
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What you need to know about investment trusts
Important information: Please keep in mind that the value of investments can go down as well as up, so you may get back less than you invest. 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 an authorised financial adviser.
Important information This information is not a personal recommendation for any particular investment. Please be aware that the value of investments and the income from them can go down as well as up and you may not get back the amount you invested. Past performance is not a reliable indicator of future results. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser. Overseas investments are subject to currency fluctuations. The shares in the investment trust 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. Fidelity Asian Values PLC (FAS), Fidelity China Special Situations PLC (FCSS), Fidelity Emerging Markets Ltd (FEML), Fidelity European Trust PLC (FEV), Fidelity Japan Trust (FJV) and Fidelity Special Values PLC (FSV) use financial derivative instruments for investment purposes, which may expose them to a higher degree of risk and can cause investments to experience larger than average price fluctuations. Fidelity Asian Values PLC, Fidelity China Special Situations PLC, Fidelity Emerging Markets Ltd invest in emerging markets which can be more volatile than other more developed markets. Fidelity Japan Trust PLC, Fidelity Asian Values PLC, Fidelity China Special Situations PLC and Fidelity Special Values PLC invest more heavily than others in smaller companies, which can carry a higher risk because their share prices may be more volatile than those of larger companies and the securities are often less liquid. Investors should note that the views expressed may no longer be current and may have already been acted upon. The latest annual reports, key information document (KID) and factsheets can be obtained from our website at www.fidelity.co.uk/its or by calling 0800 41 41 10. The full prospectus may also be obtained from Fidelity. The Alternative Investment Fund Manager (AIFM) of Fidelity Investment Trusts is FIL Investment Services (UK) Limited. Issued by FIL Investment Services (UK) Limited, authorised and regulated by the Financial Conduct Authority. Fidelity, Fidelity International, the Fidelity International logo and F symbol are trademarks of FIL Limited. UKM0324/ISSCSO00157/0924
Understanding Investment Trusts
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These countries are plugged into vast structural growth trends, says Nick Price
Fidelity International
Next: Fidelity Asian Values PLC
Finding good businesses, run by good people, at a good price
Investment trusts in 90 seconds
For more on topics such as buying and selling, fees and the role of the board, watch our series of short explainer videos.
The role of the board
6/6
Understanding fees and charges
5/6
Why do discounts and premiums arise?
4/6
How to buy and sell
3/6
Discounts and premiums explained
2/6
What makes investment trusts unique?
1/6
How the trust’s portfolio will perform against the market What the current discount or premium is and where it might be heading Whether the manager has the ability to provide positive returns in the future What extra volatility or risk will be created by the trust’s gearing
Like all funds, investment trusts can rise and fall in value. However, investment trusts also have their own characteristics that can cause volatility. As a result, investors need to take a range of factors into account when looking at an investment trust: Another consideration is that trusts tend to trade at a discount because there is a perception that their shares can be difficult to buy or sell on occasion (in other words, they’re less liquid). This is because, unlike funds, a buyer must be found in order to sell your shares. However, boards have focused more and more over the years on ways to improve liquidity. For example, at Fidelity we’ve ensured that all the trusts we offer have market capitalisations of around £200 million or more. This should mean there are enough shares in circulation to avoid the risk of investors not being able to sell when they want to.
Considering the risks
1. A long-term view
2. Diversifies your investments
3. Income consistency
4. Borrowing power
5. Discounts and premiums
1
A portfolio manager in an investment trust enjoys a high level of control and the flexibility to devise a long-term investment strategy. This is due to the closed-ended nature of these funds. In an investment trust, investors buy shares and there are a fixed number available for purchase. This ensures that money does not flow unpredictably in and out of the fund. Consequently, the manager can make buy and sell decisions for the fund's holdings based on their judgement of the right timing. By contrast, open-ended funds like OEICs see investors directly finance the fund's underlying assets. This means the size of the investment portfolio can fluctuate, and the manager will have to sell holdings if there are outflows from the fund.
2
With a stake across potentially hundreds of companies, you’re not reliant on the fortunes of just one or two businesses.
3
A key attraction of investment trusts is their potential for a more consistent income. Investment trusts may pay out the profits they have made from their investments as dividends. Importantly, they’re able to retain up to 15% of their net income each year, which means they can hold back profits in good times, to help boost dividends when market conditions are tougher. With Fidelity’s Investment Trusts, dividends can be taken as income or automatically reinvested to buy more shares in your chosen investment trusts.
4
Investment trusts have the ability to borrow additional money to invest, known as gearing. This can enhance potential investment returns, although it’s worth bearing in mind that gearing can also increase the investment risk of a trust. So while gearing can boost gains, it can also magnify losses. All our investment trusts can use bank loans, bank overdrafts and derivative instruments such as contracts for difference (CFDs) to increase their exposure to stocks. CFDs are used as a way of gaining exposure to the price movements of shares without buying the underlying shares directly.
5
Like other publicly traded company shares, a trust’s share price will be driven by demand. This means shares can trade at more than the value of the trust’s underlying investments (at a ‘premium’) or less (at a ‘discount’). This is an important difference from OEICs and unit trusts, which simply track the value of their underlying portfolio (or ‘net asset value’, NAV). Some investors view trusts that trade at a discount as a buying opportunity. But investment trusts will try to limit how far their share price falls below the net asset value, on behalf of their existing investors.
Unlike funds such as Open-Ended Investment Companies (OEICs), investment trusts tend to be structured as companies, often traded on the London Stock Exchange. They then invest in other companies, seeking to generate a profit. By buying the trust’s shares, you become a shareholder in the company, to whom the board and manager of the company are accountable. This means you have the security of knowing that the trust has a board of directors, independent of the fund manager, who make sure that it is being managed in your best interests. The trust must also provide transparency by holding an Annual General Meeting and publishing an annual report and accounts. Alongside this, there are a number of other benefits to the investment trust structure.
Investment trusts are arguably one of the greatest innovations in the financial world. They’ve exploded in number since the first one was created in 1868.
What makes investments trusts unique?
The investment philosophy which underpins Fidelity Asian Values PLC is quite simple. I try to buy good businesses, run by good people, and buy them at a good price. I don’t tend to pay much attention to the latest newspaper headlines and macroeconomic noise. I think my time is much better spent focusing on things I can control, namely buying businesses that meet my quality and value criteria. As a manager focusing on value, I tend to be drawn to unfashionable businesses. This means there will be times when the momentum of markets leaves those companies I like behind, in share price terms. This can put investors off at the moment the opportunity is greatest. The mindset of value investors must always be to be bold when others are cautious – as long as you are backed up by fundamental research. It is important for shareholders in the trust to understand and appreciate the philosophy I follow. Stock markets will go up and down, but to make money, I believe you need a good philosophy, to stay true to it, and be willing to put in the time and effort to implement it effectively.
There’s value to be found in unfashionable businesses as long as you’ve done your fundamental research, says Nitin Bajaj
Next: Fidelity China Special Situations PLC
China is a market that’s too big to ignore
I manage money in more or less the way most people manage their personal finances. If you were buying a company today, you would want to buy a good business, then you would want to hire the best people to run it for you, and finally you would want to buy it at the best possible price. I just try to do that in the stock market. Finding good businesses is not straightforward. It requires an immense amount of hard work from Fidelity’s analyst team and patience from me. We look at company after company after company, and it is only one out of perhaps 15 or 20 that meets our strict criteria. What does this mean in practice? Well, let’s say I want to buy a major toothpaste business in India; whether we will make money or not over the next five years will be driven largely by how the toothpaste market in India evolves, and how the company performs within that market versus its competitors.
Strict criteria
“A good business is only a good investment if it is bought at the right price”
Nitin Bajaj, Portfolio Manager, Fidelity Asian Values PLC
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Nitin has been Portfolio Manager of Fidelity Asian Values PLC since 1 April 2015 and Fidelity Funds Asian Smaller Companies Fund since 1 September 2013. Nitin joined Fidelity International in 2003 as a research analyst, following four years working with KPMG in India as a business analyst. In 2007, he was promoted to Assistant Portfolio Manager for the Fidelity Global Special Situations Fund in the UK, before moving to Fidelity’s Mumbai office to manage two of the company’s domestic Indian equity funds, which were available to local Indian investors.
The questions we need to consider are: why is it that the majority of Indians get up every morning and use that toothpaste? Is it the brand? Is it the research and development? Is it the management team? Is it the sales network? What allows them to dominate? Equally important is good people. By this I mean good business people; people who can run a business well, who can take market share and who can generate a lot of cash. They should also then treat that cash in the way it should be treated, which is for the benefit of shareholders. A lot of our time is therefore spent on understanding management. We interview them, we talk to their competitors, we talk to their ex-employees – just to understand how they think. Probably the hardest thing to do is buy the business at a good price. When you find these good businesses and these great managers running them, it is extremely seductive – you want to buy them. But a good business is not necessarily a good investment. A good business is only a good investment if it is bought at the right price. It requires a lot of patience to uncover a hidden gem no one else has found.
To achieve long term capital growth principally from the stock markets of the Asian region excluding Japan. The company's performance will be measured against the return of the MSCI AC Asia ex Japan Small Cap Index total return.
Small-cap value Asia Pacific Smaller Companies FAS
Style Bias AIC Sector Exchange Ticker
Objective
Trust Profile
Learn more about Fidelity Asian Values PLC
The sheer size of China’s economy and its growing importance on the world stage make it a market that’s hard to ignore. Indeed, China could become the world’s largest economy by 2030, according to the Centre for Economics and Business Research. I’d argue that an effective globally diversified portfolio should have exposure to this growth, and Fidelity China Special Situations PLC has been offering that since its launch in 2010. From tech giants through to entrepreneurial small and medium-sized companies, and even new businesses yet to launch on the stock market, we provide access to a wide range of opportunities. I primarily invest in small and medium-sized companies, where fewer investors leave greater scope for mispricing. However, the Trust does have a flexible approach and I may invest in larger companies if they fit my criteria. The liquidity offered by the investment trust structure also makes it well-suited to holding both listed and unlisted companies. Indeed, the trust can invest up to 15% of the portfolio in unlisted companies. So, if you’re looking for broad exposure to the long-term potential of Chinese equities, we believe it can act as a ‘one stop shop’ for your portfolio.
This trust can act as a ‘one stop shop’ for your portfolio, says Dale Nicholls
Next: Fidelity Emerging Markets Limited
China has an expanding middle class and rising incomes, plus we are seeing plenty of technological innovation. This should all drive its growth, creating a strong backdrop for companies to thrive. On this basis, I look to identify and invest in companies that are well-placed to capitalise on the transformation. This means companies with good long-term growth prospects or even those whose strength has been underestimated by the wider market. The portfolio comprises around 100 hand-picked growth stories that best harness the country’s long-term potential. They are often beneficiaries of growing domestic consumption and the rising middle class, but can also be involved in technological innovation, healthcare or the green economy. To find the best opportunities, it is essential that we have deep research capabilities and locally based experts. This allows us to truly 'get under the bonnet' of the stocks we invest in. Importantly, Fidelity’s analysts are Chinese speaking and able to meet with companies in person. This gives us unparalleled insight into the businesses we are considering. We work tirelessly to identify and invest in companies that are best placed to capitalise on China’s incredible transformation. China is a complex country, but it is also rich with opportunity, and it is incredibly rewarding to be able to scour the market and find the gems of the future.
A strong backdrop
“China has an expanding middle class and rising incomes, plus we are seeing plenty of technological innovation”
Dale Nicholls, Portfolio Manager, Fidelity China Special Situations PLC
Dale joined Fidelity in 1996 as a Research Associate in our Asia office. It was during his tenure as an analyst that Dale first began to take an interest in the dynamics of the Chinese market. He regularly visited Chinese companies to get a clear view of the key supply and demand chains of the industries he covered. Prior to joining Fidelity, Dale worked at Bankers Trust Asia Securities in Tokyo and as a Market/Business Analyst at Sony Corporation, also in Tokyo. He graduated from the Queensland University of Technology in Australia.
The investment objective of the company is to achieve long-term capital growth from an actively managed portfolio made up primarily of securities issued by companies listed in China and Chinese companies listed elsewhere. The company may also invest in listed companies with significant interests in China
Unconstrained - small/mid-cap value and growth
Style Bias
Learn more about Fidelity China Special Situations PLC
China/Greater China FCSS
AIC sector Exchange Ticker
To build a dynamic portfolio fit for the future, investors need to align themselves with areas of compelling structural growth. That growth is likely to be found in the world’s emerging markets, whose younger, more dynamic economies provide fertile ground for companies to thrive. Indeed, emerging markets are plugged into vast structural growth trends. These range from producing the commodities necessary for the energy transition to reaching consumers with newfound access to credit. And technological developments in India, Korea or Taiwan are every bit as exciting as they are in Silicon Valley. These companies can tap into fast-growing, dynamic domestic markets while also having a global reach.
Next: Fidelity European Trust PLC
We strive to find opportunities wherever they emerge in the developing world and across the market capitalisation spectrum. This includes listed companies that dominate their market locally or globally, as well as the weakest positioned stocks where we can deploy short positions. While it is sometimes assumed that emerging markets are more volatile, many emerging economies are in fact less exposed to risks often seen in developed markets, such as ageing populations, slow growth and high debt. And while there are geopolitical considerations that require close scrutiny, other risks have eased. Fiscal positions have strengthened, with many countries having better current-account balances and more significant foreign-exchange reserves than during previous cycles. Improved standards of governance also mean companies are offering greater transparency than ever before.
Opportunities and risks
“We strive to find opportunities wherever they emerge in the developing world”
Nick Price, Portfolio Manager, Fidelity Emerging Markets Limited
Nick joined Fidelity in January 1998 as a Research Analyst covering a number of pan-European sectors before being selected as the Assistant Portfolio Manager for our flagship European Growth Fund in September 2004. In 2005, Nick led the development of Fidelity’s Emerging Europe, Middle East, and Africa (EMEA) group, launching the team’s first portfolio on 30 November 2005. After four years of successfully managing our emerging EMEA discipline and supported by a growing Emerging Markets Team of analysts and portfolio managers, Nick was appointed to manage our emerging market equity products in July 2009. He developed and launched our FAST Emerging Markets strategy in 2011 on which Fidelity Emerging Markets Limited is based. Nick holds a Bachelor of Commerce and Diploma in Accounting from the University of Natal and is a Member of the South African Institute of Chartered Accountants.
Learn more about Fidelity Emerging Markets Limited
An enhanced investment toolkit in action
Fidelity Emerging Markets Limited has a ‘go-anywhere’ approach, seeking out opportunities wherever they emerge across the developing world. The investment company seeks to invest in good quality businesses that can sustainably grow over long periods of time. It looks for companies benefiting from long-term growth trends as countries emerge and develop, from rising air travel to financial inclusion and technological innovation. We aim to invest in companies with dominant franchises, strong balance sheets and capable management teams that are well-positioned to take advantage of the abundant structural growth opportunities across developing markets. While looking for those structurally growing companies, we will also find those that are struggling and where we believe the share price is likely to fall. We seek to take advantage of this by taking out what are known as short positions – an investment strategy that enables us to profit when a share price drops in price. Positions we short include businesses which we think have significant downside, often thanks to weak balance sheets, structural weaknesses in their business models or industries, or poor management – the mirror image of the companies on which we have a positive view.
Across our portfolio, we carefully manage risk, striving to ensure our investors benefit from emerging markets’ evolution and growth without experiencing every bump in the road. And by harnessing our comprehensive global analyst resource, we can find exciting opportunities wherever they are in the emerging world. In doing so we seek to maximise our ability to profit from businesses of all kinds: the successful and the failing, the large and the small, and the disruptors and the disrupted.
Maximising investor benefit
Chris Tennant, Co-Portfolio Manager
“We seek to maximise our ability to profit from businesses of all kinds”
Chris joined Fidelity in January 2011 as an Equity Analyst, covering European transportation. In October 2012, he rotated onto the London based Emerging Markets Team to cover EMEA and Latin America metals and mining stocks. In January 2015, Chris was chosen by Nick to undertake a newly created Emerging Markets Shorting Analyst role. Since then, he has worked closely with Nick in identifying opportunities for the short book, initially with a focus on EMEA and Latin America, before expanding his expertise to global emerging markets. In July 2019, Chris was appointed as Assistant Portfolio Manager on the FAST Emerging Markets Fund (on which Fidelity Emerging Markets Limited is based), before being promoted to Co-Portfolio Manager in 2021. Chris is also Co-Portfolio Manager for Fidelity Emerging EMEA, and Latin America strategies having been appointed to those funds in 2021. Chris has spent his entire career at Fidelity. He holds a master’s degree in Engineering from Imperial College London.
To achieve long term growth by primarily investing in companies whose head office, listing, assets, operations, income, or revenues are predominantly in or derived from emerging markets. The Company is also able to use derivatives for efficient portfolio management, to gain additional market exposure and to seek a positive return from falling asset prices.
Large-cap core (blend) Global Emerging Markets FEML
Since the launch of Fidelity European Trust over 30 years ago, Europe has witnessed its fair share of political and economic upheaval. It’s important to note, however, that whatever might be happening on the political stage, the corporate sector carries on. Europe is a well-diversified market with a long list of world-leading companies. Clearly there is potential for geopolitical shocks, but how all this plays out is anyone’s guess. I’ve always felt trying to predict these cycles, or time the market, is something of a mug’s game. My approach is to look beyond the economic and political noise. I concentrate on the real-life progress of listed businesses across Europe, identifying opportunities in this large and diverse region.
It is important to look beyond the political and economic noise, says Sam Morse
Next: Fidelity Japan Trust PLC
The Trust invests predominantly in continental European equities (and their related securities), though up to 20% of gross assets may be invested in companies outside of the continent. It follows a consistent stock-picking approach, seeking to identify companies able to grow dividends over a three to five-year horizon. In practice, this means researching and investing in stocks that I believe can grow their dividends consistently, irrespective of the prevailing economic backdrop. History shows that these companies tend to outperform the market over the longer term. Those with the cushion of a healthy and growing dividend also tend to be resilient during periods of macroeconomic uncertainty. By aiming to invest in solid and sustainable dividend-paying stocks, I believe Fidelity European Trust PLC provides core defensive exposure to European equities.
Consistent dividends
“My approach is to look beyond the economic and political noise”
Sam Morse, Portfolio Manager, Fidelity European Trust PLC
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Sam joined Fidelity in 1990 and spent seven years with the company as a research analyst, covering pan-European retail stocks, and then as a portfolio manager, running funds including the Fidelity Income Plus Fund, the Fidelity Growth & Income Fund and the Fidelity MoneyBuilder Growth Fund. He then left Fidelity to be Head of UK Equities at M&G. Sam returned to Fidelity in 2004 to manage UK equities for institutional clients. He managed the Fidelity MoneyBuilder Growth Fund from December 2006 for three years before becoming Portfolio Manager for the Fidelity European Fund, which he continues to run today. He assumed responsibility for Fidelity European Trust PLC in January 2011.
I am naturally cautious and am not inclined to take large bets against the market in individual sectors or countries. Instead I prefer to focus on companies which I believe will be able to outperform their competition over the longer term. My process is therefore built from the bottom up, looking at individual businesses, but keeping an eye on the wider market to avoid unexpected pitfalls. I look to build a portfolio of 40-50 attractively valued companies, with strong balance sheets, a track record in cash generation and the potential to grow dividends consistently on a three to five-year view. This type of company offers a good combination of fundamental value and therefore downside protection, as well as good growth prospects likely to be rewarded by the market in future. The trick is to identify those future dividend growers before they have done so – and importantly, before the rest of the market. This requires time and discipline from me and our analyst team in London and throughout Europe.
A bottom-up approach
Marcel Stötzel, Co-portfolio Manager, Fidelity European Trust PLC
Marcel joined Fidelity as an analyst in 2014. In addition to his analyst responsibilities, Marcel was promoted to head the cyclicals segment of an European analysts ‘best ideas’ fund in 2018. He has been working alongside Sam Morse as Co-PM since 2020. He first joined the Fidelity equities team as an MBA intern (covering US tech) before being hired fulltime to cover European Software and IT services and thereafter European Aerospace, Defence and Airlines. Prior to joining Fidelity, Marcel worked as an investment banker at Barclays. Marcel holds an MBA (INSEAD), is a CFA charter holder and graduated with a Business Science (Hons) in Finance from the University of Cape Town.
The company aims to achieve long-term growth in both capital and income by predominantly investing in equities (and their related securities) of continental European companies.
Large-cap growth Europe FEV
Learn more about Fidelity European Trust PLC
"The trick is to identify future dividend growers before they have done so"
I have a deep interest in understanding how cultural differences shape the way in which companies are run across the globe. In many ways, this naturally led me to Japan, as companies here can have different management styles and business models to those in the West. In recent years, there has been a resurgence of interest in investing in Japan. One of the key drivers of this has been a change in corporate mindsets and a greater focus by the management of Japanese-listed companies on creating value for minority shareholders. This has been brought about by policies designed to encourage greater capital efficiency and returns on equity. Shareholder returns have been boosted, which has in turn encouraged investment from overseas – lifting the Japanese market as a whole.
The trust pursues a first-hand view of new ideas that are coming to market, says Nicholas Price
Next: Fidelity Special Values PLC
When investing, I deploy a ‘growth at reasonable price’ investment style and approach. This involves identifying companies whose growth prospects are underappreciated or not fully recognised by other investors. I have a stylistic bias towards smaller and medium-sized companies because they tend to be less researched and are therefore more likely to be mispriced, though larger companies aren’t excluded. A key part of my investment process is detecting signs of change in a company’s fundamental strengths (such as balance sheet or sales), its market or regulatory environment, sentiment and valuations. Among the most appealing aspects of managing an investment trust portfolio is the ability to invest in companies which have not yet listed. We typically see around 100 initial public offerings (IPOs) per year in Japan. Being on the ground means that we see a lot of the new ideas and business models that are coming to market first-hand. What we have also seen in recent years is that the number of analysts actively covering Japanese markets has consistently declined, which creates opportunities for bottom-up managers like me, who are willing to do the leg work and identify the most attractive investment cases.
Unearthing gems
“Being on the ground and speaking the language represent significant advantages when meeting the companies I invest in”
Nicholas Price, Portfolio Manager, Fidelity Japan Trust
Nicholas joined Fidelity Investments Japan in 1993 and spent six years as a research analyst covering the retail, banking, brokerage, consumer electronics and pharmaceuticals sectors. In 1999, he was promoted to Portfolio Manager, running Japanese equity mandates for domestic institutions. He now manages Japanese equity portfolios on behalf of both domestic and overseas clients Nicholas was appointed to the trust in September 2015. Nicholas graduated from Cambridge University with an MA in History and studied Japanese at Keio University.
It was an insatiable sense of curiosity that first led me to Fidelity and into fund management. My eyes were opened by Peter Lynch, an American investor and former Fidelity employee, whose book titled One Up on Wall Street got me hooked on the world of investing. It really highlighted the importance of company research and turning over a lot of stones every day to find new investment ideas. I was born in the UK but have been based in Tokyo for more than 30 years. I’m fluent in Japanese, having studied at Keio University, and this is a huge advantage when meeting the key decision-makers at the companies I invest in and when scouting for new ideas on the ground. For me, it’s all about joining the dots between different ideas and forming a new line of enquiry. I focus on gathering multiple information sources: from attending industry conferences to visiting university professors, and talking to unlisted companies or consulting senior management. You just need to keep researching until you gain reasonable conviction in the investment thesis.
Turning over new stones
The company aims to achieve long-term capital growth by investing predominantly in equities and their related securities of Japanese companies.
Mid-cap growth Japan FJV
Learn more about Fidelity Japan Trust PLC
Fidelity Special Values PLC has a well-established history as an actively managed, contrarian investment trust. I have run the portfolio since 2012 and during that time I have continued to use the same value-focused approach that was established under the care of Anthony Bolton some 30 years ago. My investment style is very much in keeping with that heritage and history – looking for attractively-valued companies whose potential for share price growth or recovery has been overlooked by the market. I focus on unloved companies where things can improve, and I invest in companies of all sizes. I hope, in doing so, to position the trust as the investment of choice for those seeking exposure to UK-listed companies, but with the benefit of up to 20% of the portfolio being held in listed companies on overseas exchanges. This helps to enhance shareholder returns.
It takes a particular mindset and a highly disciplined approach to execute a contrarian approach successfully, says Alex Wright
Next: Fidelity International
Find out more about Fidelity International
As a contrarian, I’m drawn to unfashionable stocks that are out of favour and trade on cheap valuations. I’m looking for potential positive change that others haven’t seen yet. I also look to only invest in companies where I understand the potential downside risk, in order to limit the possibility of permanent losses of capital. Humans are social animals, behaving socially when making investment decisions. As a result, investing against the tide is a psychologically difficult thing to do – it can lead to periods of relative underperformance while you wait for the value of a business to be recognised. Indeed, often the best time to invest is when things look at their worst. It therefore takes a particular mindset and a highly disciplined approach to execute successfully. Company research and the insight and expertise of our large team of analysts have been central to the long-term success of that approach. Our philosophy is to base investment decisions on company fundamentals such as competitive position, management strength, growth opportunities, valuation and so on. Overarching trends in the economy (top-down factors) play a supplementary rather than primary role in our investment decisions.
The draw of the unfashionable
“Often the best time to invest is when things look at their worst”
Alex Wright, Portfolio Manager, Fidelity Special Values PLC
Alex joined Fidelity in 2001 as a research analyst and covered a number of sectors across the market cap spectrum, both in the UK and in developed and emerging Europe. He became a Portfolio Manager in 2008 and managed the Fidelity UK Smaller Companies Fund from its launch to 2014. He took over responsibility for the company’s portfolio on 1 September 2012 and was subsequently appointed as Manager of Fidelity Special Situations Fund in 2014. Alex has a BSc (Economics) from Warwick University, where he graduated with First Class Honours, and he is also a CFA Charterholder.
Ideally, I want to invest in companies that are exceptionally cheap on relevant measures, or which have some kind of asset that should prevent their share prices falling below a certain level. This can be anything from inventory to intellectual property that gives a margin of safety. I look for companies where I believe perceptions may shift due to changes in the company’s competitors or market, a new strategy, a new product line or an expansion into new business areas. I also impose a strict sell discipline on myself once the recovery has taken place. Within the investment trust structure, I am able to take positions in smaller and less liquid companies. The trust’s closed-ended nature and stable pool of assets allow me to establish larger weights than would not be possible if I had to worry about flows into and out of the fund. Another benefit of that structure is that I am able to borrow to increase the Trust’s equity exposure when I believe the market offers particularly attractive investment opportunities. The extent to which I use this facility at any particular point in time will reflect my level of conviction in the opportunity set and our ability to add value based on prevailing valuations.
Shifting perceptions
Jonathan Winton, Co-portfolio Manager, Fidelity Special Values PLC
Jonathan joined Fidelity as an analyst in 2005, and covered pan European Support Services, Small Cap Technology and Beverages & Tobacco. He manages the Fidelity UK Smaller Companies Fund and has worked alongside Alex Wright in the Fidelity UK equities team since 2013. He became co-portfolio manager of the Trust in February 2020.
The investment objective of Fidelity Special Values PLC is to achieve long-term capital growth primarily through investment in equities (and their related securities) of UK companies which the investment manager believes to be undervalued or where the potential has not been recognised by the market.
Mid-cap value UK All Companies FSV
Learn more about Fidelity Special Values PLC
"We look to invest in companies that are exceptionally cheap on relevant measures"
Find out more…
The latest annual reports, key information document (KID) and factsheets can be obtained from our website at fidelity.co.uk/its or by calling 0800 41 41 10. The full prospectus may also be obtained from Fidelity. The Alternative Investment Fund Manager (AIFM) of Fidelity Investment Trusts is FIL Investment Services (UK) Limited.
Important information
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Monthly factsheets on each trust including the portfolio mix, charges and up-to-date commentary from the Portfolio Manager Current share price and past performance Daily factsheets, providing you with daily NAV, share prices, discount and gearing information Downloadable annual and interim reports Video updates and interviews with the portfolio managers, giving their current views on the markets and their preferred areas to invest
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Shareholders on the main register: 0871 664 0300 Monday to Friday 8.30am to 5.30pm Fidelity Personal Investing Clients: 0800 414161 Monday to Friday 8.30am to 5.30pm and Saturdays 9am to 12.30pm Investing with an adviser clients: 0800 358 4060 Monday to Friday 9am to 5.30pm Fidelity Adviser Solutions: 0800 414181 Monday to Friday 8.30am to 5.30pm
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At Fidelity International, our purpose is to work together to build better financial futures for our clients. We believe that investing, over the long-term, is critical to achieving that. Our focus is on delivering sustainable investment returns, while managing our impact on society and the environment. To do this, we incorporate sustainability into our business operations and our investment process, working with investee companies to operate more sustainably, deliver those long-term returns and secure a better future for all.
The best and most innovative investment products
Fidelity offers a broad range of innovative solutions and services to meet our clients’ varied and evolving needs. These span asset classes such as equities, fixed income, multi asset and real estate, as well as various investment styles including active and passive and specific sustainable strategies. Wherever in the world we are investing, our success is underpinned by our deep commitment to proprietary research. Connecting our teams in real-time across the globe creates a consistent and sustainable investment platform which acts on intelligent insight. This leverages all of our powerful global capabilities – including company access, regional and sector collaboration, and asset class expertise.
Fidelity has over 30 years’ experience managing investment companies and manages over £5.0 billion in assets across its six portfolios. These are all equity focused strategies. As a major platform distributor, we’re also able to offer access to trusts managed by third parties through a range of different product wrappers. Source: FIL International, 31 January 2024
Our UK investment trust business
More information on our investment trusts
For shareholders on the main register, please email: enquiries@linkgroup.co.uk For accounts held within another platform or distributor, please contact them directly.
