/ TRUST PICKS /
ALEX PAGET , RESEARCH ANALYST AT KEPLER PARTNERS
VALUE INVESTING HAS WITNESSED A COMEBACK over the course of 2016 following many years in the doldrums , although it is debateable whether its outperformance relative to growth will continue . If its resurgence does endure , however , Alex Paget , research analyst at Kepler Partners , says there are few trusts better placed to benefit than Fidelity Special Values .
“ With so much uncertainty created by the Brexit vote , backing a UK equity trust with a clear mid- and small-cap bias certainly carries risk . This is evident from Fidelity Special Values ’ share price underperformance relative to the UK equity market in the past year ( though it has outperformed in NAV terms ),” the analyst explained .
“ However , manager Alex Wright only buys undervalued companies where he sees a catalyst for positive change , which we believe offers investors a greater margin of safety compared with other value portfolios .”
Paget says another of the trust ’ s distinguishing features is that its discount to NAV has been negatively correlated to the movements of the FTSE All Share in the past , tightening during market falls but generally widening during rallies .
“ The discount has once again narrowed since the market began to fall in mid-October and while more in-line with historical averages , we believe its current level of -5.8 per cent can still narrow further ,” he added .
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