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Fidelity European Values aims for long-term capital growth via a portfolio of European equities. It is managed with a conservative stockpicking approach, aiming to identify companies with strong balance sheets, proven business models and disciplined use of capital which the manager hopes can grow their dividend regardless of the economic environment.
The portfolio will typically be comprised of between 40-50 holdings, and at the time of writing the top ten holdings make up c.40% of total assets, making its concentration quite punchy, although by no means the most concentrated in the sector. The portfolio is dominated by large caps, defined by businesses with a market cap over €10bn make up 76.8% of the holdings.
Geographical restrictions are not imposed, and the portfolio is heavily concentrated in France (26.7%), Switzerland (15.3%) and Germany (15.3%). The rest of the portfolio is made up of smaller weightings around the 5% mark. The largest sectoral exposures come from financials (17.6%), health care (17.2%) and consumer goods (16.8%).
The fund manager, Sam Morse, has more than 25 years’ experience as an investor and has produced solid results at the helm of the trust since his appointment at the start of 2011. During this period, he has delivered an NAV total return of 107.4% against a return of 68.6% from the benchmark FTSE World Europe ex UK index. The trust has failed to produce positive returns since the start of the year (-1.5%), though this is largely due to the October correction.
Sam is reasonably positive on the outlook over the near future and foresees a pick up toward the back end of 2018. However, he thinks the outlook is more clouded over the medium term – with a recession possible in 2019/20. The discount currently sits at 9.8%, having widened slightly since we looked at the trust in January last year. Over the past five years we have seen the trust’s discount vary greatly, ranging from -2.8% to close to -18%.
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Fund History: Fidelity European Values
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