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(Alliance News) - Fidelity Special Values PLC hiked its annual dividend on Friday though it underperformed against its benchmark as holdings in financials and consumer-facing companies proved limiting.
In its financial year ended August 31, the company's net asset value total return was negative 4.9% while its FTSE All-Share Index benchmark returned a positive 0.4%. NAV per share fell 7.0% to 252.99p on August 31 from 271.98p the year before.
Fidelity Special Values invests in special situations - stocks that are undervalued but which it expects to improve. Given its preference for more volatile investments, the firm's returns have been limited by "an increasingly risk-averse environment" and its "holdings in selected financials and consumer-facing stocks weighed down performance".
The company was not concerned by its performance in financial 2019, given it has exceeded its benchmark over the past three and five years.
Nonetheless, the company has recommended a final 3.65 pence per share dividend plus a 1.50p per share special dividend. This takes the figure for the year as a while up by 45% to 7.25p per share from 5.00p per share.
Chair Andy Irvine said: "The good news for contrarian investors is that the negative sentiment towards the UK is creating an unforgiving environment where investors' behavioural biases cause them to avoid companies in uncertain or complex situations, resulting in valuation discounts for certain stocks."
Irvine also commented on the strategy of Fidelity Special Values' portfolio manager, Alex Wright.
"Alex's process is designed to identify the most attractive of these and build a portfolio driven by positive change in companies and industries. He will continue to focus on strong stock picking opportunities and risk management and aims to deliver a positive relative performance of the company's NAV. The board feels that the strategy in place is well aligned with the long term interests of the company's shareholders.
Shares in Fidelity Special Values were up 0.2% at 266.14p in London on Friday.
By Anna Farley; annafarley@alliancenews.com
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