Fidelity European Values PLC
New for 2019. Generates growth and income from quality companies
Fidelity European Values has received Rated Fund status this year in the hope that it will continue to provide a more reliable and steady source of returns than outgoing fund Henderson European Focus.
The Fidelity investment trust benefits from experienced manager Sam Morse, who has been at the helm since 2011. He favours a bottom-up approach, conducting his own stock analysis and making good use of a well-resourced team of around 40 analysts.
He aims to deliver both capital growth and income over the medium to long term by holding high-quality names. He defines quality as growth that can be translated into a cash return to shareholders. Morse views dividends as an indicator of a company’s ability to grow in a sustainable manner. The trust yields more than 2% and pays income annually.
He favours companies focusing on four key areas: a good track record, good return on capital employed, structural growth throughout the business cycle and the ability to generate cash.
Valuation is important too, as he is not prepared to pay any price for a good opportunity. In this regard, he is a ‘Garp’ investor, looking for ‘growth at a reasonable price’.
The trust typically holds 50 to 60 stocks and is well diversified across countries, sectors and sizes of companies.
When conviction is high, Morse will use gearing to augment returns. At the end of 2018, the trust was almost 6% geared.
Given his focus on quality, the fund tends to protect capital better than peers in weaker markets, but can lag when lower quality stocks are leading markets higher.
Shares in the trust can typically be picked up at a discount to net assets of around 10%.See all Money Observer rated funds
|Nestle SA||6.93 %|
|Roche Holding AG Dividend Right Cert.||5.40 %|
|Total SA||4.34 %|
|SAP SE||3.84 %|
|Euro Stoxx 50 Indx_fut||3.68 %|
|Sanofi SACFD||3.67 %|
|L'Oreal SA||3.42 %|
|Sampo Oyj A||3.19 %|
|Novo Nordisk A/S B||3.14 %|
|LVMH Moet Hennessy Louis Vuitton SE||3.14 %|
|Europe - ex Euro||29.36 %|
|United Kingdom||6.49 %|
|Financial Services||18.61 %|
|Consumer Defensive||12.65 %|
|Consumer Cyclical||6.81 %|
|Basic materials||5.28 %|
Sam Morse assumed responsibility for Fidelity European Fund on 1 January 2010 and the portfolio of Fidelity European Values on 1 January 2011. Prior to becoming a portfolio manager, Sam spent two years as a research analyst with Fidelity, covering a range of sectors, then six years as an equity income fund manager at Fidelity. He also worked as Head of Equities and Head of UK Equities at M&G from 1997 to 2003.
Data provided by Morningstar.
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