fidelitys wright rotates into large cap

Alex Wright, manager of the Fidelity Special Values trust, is rotating his portfolio into larger capitalisation stocks and more defensive mid-caps on valuation grounds.

fidelitys wright rotates into large cap

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Wright, who also took over the Fidelity Special Situations fund in January of this year, said that he was having to work harder to find new ideas in current markets, but attractive opportunities were still available. 
 
He said that the headline valuations of FTSE 250 and small cap indices are at a small premium to historic averages, which makes him more cautious on this part of the market. He has moved into larger cap stocks such as Shell, HSBC and Sanofi, where valuations are more compelling. 
 
He is also holding defensive mid caps which hold sufficient cash to be able to reinvest in their businesses and pay a higher dividend, such as DCC, UDG Healthcare and McColls. 
 
Over the past six months, the trust has seen a rise in net asset value of 14.6% compared to 8.8% for its benchmark. The trust is currently sixth out of 16 funds in the AIC UK All Companies sector, having delivered a return of 68.1% over three years, compared to an average return of 38.8% from the wider sector. The trust currently trades at a 4.3% discount to net asset value. 
 
During the six month period, the trust did well from its holdings in domestically-focused medium and small sized companies. The strongest contributors to performance were wealth management group Brewin Dolphin, which saw an increase in funds under management and cut costs. This remains the largest holding in the trust. It also did well from Irish support services firm DCC and healthcare company NMC Health.
 
On the other side, performance was dented by a holding in Mothercare, which was hit by a profits warning. International games retailer Games Workshop also fell after it announced a drop in first half year profits. However, Wright is sticking with both positions, believing that the companies still have growth potential.  
 

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