Trustnet Magazine Issue 24 December 2016 | Page 16

YOUR PORTFOLIO

/ TRUST PICKS /

ALL I WANT
FOR CHRISTMAS
Anthony Luzio asks three experts which investment trusts
they hope to find in their stocking this year

A

S SEEN IN OUR REVIEW OF 2016, the
unexpected events of the past 12 months
have turned the world of investing on its
head. However, while the past year has
taught investors to expect the unexpected, you can’t
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ignore the seismic events that have been triggered in
2016, and these have helped to inform the 2017
investment-trust recommendations made here by three
experts. Fans of FE Invest and Trustnet may spot a couple
of familiar names among the crowd...
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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
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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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