Fidelity European Values

Outperforming and pursuing recent opportunities

4 November 2020

Fidelity European Trust (FEV, formerly Fidelity European Values) seeks to achieve long-term growth in both capital and income from a portfolio comprising mainly continental European stocks. FEV’s managers, Sam Morse and Marcel Stötzel, note that the coronavirus crisis has temporarily marginalised many fundamentally strong and resilient European companies. They believe this has created abundant new opportunities for long-term investors such as FEV to benefit as these companies recover and re-rate over time. The trust’s ambition to be the cornerstone investment of choice for investors seeking European exposure across market cycles is supported by its very solid outperformance over the long term. In addition, FEV’s dividend has increased every year since 2010 and the board intends to maintain dividend increases during the current crisis, drawing on reserves if necessary. MORE »

Following the same tried-and-tested strategy

19 May 2020

Fidelity European Values (FEV) plans to change its name to Fidelity European Trust later this year to better reflect its objectives; however, there will be no change to the disciplined investment process. Manager Sam Morse continues to focus on cash-generative companies with strong balance sheets and significant dividend growth potential. He has increased the trust’s level of gearing to benefit from an anticipated recovery in the European stock market, as equity prices typically discount an economic improvement by around six months. However, the manager is continuing to run the portfolio in a measured way, acknowledging that ‘there is no big rush to change the portfolio, as costly mistakes can be made’. FEV has outperformed the continental European market over the last one, three, five and 10 years in both NAV and share price terms. MORE »

Disciplined process driving outperformance

16 January 2020

Fidelity European Values (FEV) is managed by Sam Morse, who selects stocks on a bottom-up basis, focusing on quality companies with strong balance sheets that are able to grow dividends over the long term. He notes that investor concerns that affected the market in 2019 are abating: central banks are very supportive; a resolution to the US-China trade war is looking more likely; and within Europe, there is the prospect of fiscal stimulus to support economic growth. While there is potential for a rotation in market leadership towards cyclical stocks, which could put the fund’s relative performance under pressure, the manager is ‘sticking to his knitting’, and remaining disciplined, rather than shifting his portfolio exposures in an effort to try to ‘time the market’. MORE »

Outperforming its benchmark and peer group

20 June 2019

Fidelity European Values (FEV) has had a conspicuously strong period of outperformance since March 2017, building on its positive long-term track record. Its NAV total return is ahead of the AIC Europe sector average over one, three and five years, ranking first or second out of eight over each period, and FEV has clearly outperformed its benchmark over one, three, five and 10 years to end-May 2019. Helped by a reallocation of expenses between the revenue and capital accounts, the board raised the FY18 dividend by 44.4% to 6.28p – representing a 2.5% yield – while also adding to reserves, and an interim dividend will be introduced in FY19. FEV’s discount has narrowed to 8.3%, similar to the sector average of 8.5% but wider than its five-year low of 2.8%, and from 2019 the board is seeking to maintain the discount in single digits in normal market conditions. MORE »

Outperforming in an uncertain market

26 October 2018

Fidelity European Values (FEV) is a relatively defensively positioned trust investing primarily in continental European equities. Recent performance has been strong relative to its FTSE World Europe ex-UK index benchmark and peers, helped by its exposure to defensive technology stocks, less interest rate-sensitive banks, and energy stocks, as well as holding no automotive stocks. The portfolio remains well-balanced, but is now more concentrated in a smaller number of stocks (currently 47), as the manager has taken profits where prospects for sustained dividend growth have weakened, and few new ideas have met his investment criteria. FEV’s consistent longer-term track record and tendency to outperform in periods of market weakness may find appeal in an uncertain market environment. MORE »

Concentrating its portfolio and hedging its bets

3 April 2018

Fidelity European Values (FEV) aims to achieve long-term capital and income growth from a portfolio of primarily continental European equities. Although well diversified, the portfolio became more concentrated during 2017, as the manager sold stocks that had performed well and reinvested in existing holdings. While retaining a positive net market gearing, the manager added 10 single-stock short positions to the portfolio in August 2017, reflecting the view that valuations had become stretched in many parts of the market. A lower 0.75% management fee on assets over £400m takes effect from April 2018, while a reallocation of fees and expenses from revenue to capital will positively affect the level of future dividend payouts. MORE »

Concentrating its portfolio and hedging its bets

3 April 2018

Fidelity European Values (FEV) aims to achieve long-term capital and income growth from a portfolio of primarily continental European equities. Although well diversified, the portfolio became more concentrated during 2017, as the manager sold stocks that had performed well and reinvested in existing holdings. While retaining a positive net market gearing, the manager added 10 single-stock short positions to the portfolio in August 2017, reflecting the view that valuations had become stretched in many parts of the market. A lower 0.75% management fee on assets over £400m takes effect from April 2018, while a reallocation of fees and expenses from revenue to capital will positively affect the level of future dividend payouts. MORE »

Adopting a more cautious approach

18 August 2017

Fidelity European Values (FEV) aims to achieve long-term capital growth from its European equity portfolio by focusing on companies that are able to deliver medium-term dividend growth. This approach gives FEV a defensive bias as well as a yield close to the sector average. Although he acknowledges a number of positive indicators for the near term, manager Sam Morse sees an upcoming turning point in the economic cycle and the prospect of rising bond yields as negative catalysts for equity valuations. His caution is reflected in FEV’s low gearing and the recent concentration of the portfolio, as a number of holdings with weakening fundamentals have been sold into market strength during the first half of 2017. MORE »

Celebrating 25 years since fund launch

9 January 2017

Fidelity European Values (FEV) recently celebrated its 25th anniversary. It aims to generate long-term capital growth from investment primarily in continental European equities, although up to 20% of gross assets may be invested in companies outside the FTSE World Europe ex-UK benchmark. Since January 2011, FEV has been managed by Sam Morse, who uses a bottom-up process to select companies that have solid fundamentals and are able to grow their dividends over a three- to five-year horizon. FEV’s NAV total return has outperformed the benchmark over three, five and 10 years. Revenue earnings are fully paid out as an annual dividend; the current dividend yield is 1.8%. MORE »

Finding opportunities among large caps

21 June 2016

Fidelity European Values (FEV) aims to achieve long-term capital growth through investing primarily in continental European equities. The manager follows a consistent bottom-up approach, seeking to identify companies able to grow dividends over a three- to five-year horizon. FEV’s NAV total return performance has been ahead of its FTSE World Europe ex-UK benchmark over three, five and 10 years, although investments in out-of-favour areas of the market have given the portfolio a slightly contrarian large-cap bias relative to peers, which has been unhelpful during recent small-cap outperformance. The portfolio’s historically high relative dividend yield and superior growth prospects are seen by the manager as a positive indicator for future performance. MORE »

Focused on fundamentals

11 December 2015

Fidelity European Values (FEV) is an actively managed closed-ended fund investing primarily in continental European equities. Unaffected by recent market volatility, the manager pursues a fundamental bottom-up approach with a three- to five-year investment horizon, aiming to achieve long-term growth from a diversified portfolio of companies able to consistently grow dividends. NAV total returns have been ahead of the trust’s FTSE World Europe ex-UK index benchmark over one, three, five and 10 years. The manager sees the portfolio’s historically high relative dividend yield and superior growth prospects as a positive indicator for future performance. MORE »

Increasing confidence in the earnings outlook

18 May 2015

Fidelity European Values (FEV) is an actively managed closed-end fund with a focus on continental Europe. The manager aims to achieve long-term growth through investing in a diversified portfolio of companies able to grow dividends consistently over a three- to five-year time horizon. NAV total return performance has been ahead of the FTSE World Europe ex-UK index benchmark over one, three, five and 10 years. With market valuations implying improving earnings growth, the manager highlights increasing confidence in the European corporate earnings outlook, seeing above-average earnings and dividend growth prospects in the near term. MORE »

Keeping focus on value and fundamentals

6 February 2014

Fidelity European Values (FEV) invests primarily in mid- and large-cap continental European equities and is focused on cash-generative businesses with strong balance sheets that are exposed to secular growth stories. FEV has a long-term record of outperformance although has underperformed its benchmark since May as demand has shifted towards riskier, more cyclical stocks. It is proposed that FEV's ordinary shares be subdivided (10 for 1) to enhance their appeal to smaller investors. MORE »

Focus on ability to grow dividends over 3-5 years

11 July 2013

Fidelity European Values Plc (FEV) is an investment trust that invests primarily in mid- and large-cap continental European equities. Sectoral active weights are kept broadly within 5% of the FTSE World Europe ex-UK benchmark and the manager seeks to generate the majority of alpha from stock selection. This stock selection, within sectors, is driven by bottom-up fundamental analysis and the manager focuses on companies that have a strong ability to grow dividends over the next three to five years. MORE »

Balanced European portfolio

17 December 2012

Fidelity European Values Plc (FEV) is an investment trust that invests primarily in mid and large cap Continental European equities. The manager does not take aggressive sector positions (sectoral active weights are kept broadly within 5% of the FTSE World Europe ex-UK benchmark). The manager seeks to generate the majority of alpha from stock selection. Stock selection, within sectors, is driven by bottom-up fundamental analysis and the manager looks for companies with strong ability to grow dividends over the next three to five years. During the last 12 months, FEV has outperformed its benchmark by 13.0% and 9.0% in terms of price and NAV total return respectively. MORE »