Fidelity European Trust PLC (LON:FEV) monthly factsheet for July 2024.
Portfolio Manager Commentary
Continental European equities delivered positive returns in Euro terms (but were negative in GBP), despite experiencing some volatility along the way. The month started on a cautious note as investors awaited the results of the French election. The outcome was a hung parliament as no single party crossed the 289-seat threshold to secure an outright majority, thereby prolonging political uncertainty. The eurozone economy grew at 0.3% in the second quarter of 2024, slightly beating the forecasted growth rate of 0.2%. As expected, the ECB left key interest rates unchanged at its July meeting.
The Trust outperformed the index in July. Stock picking across most sectors, notably industrials, contributed to relative returns with gearing also adding value. The Trust’s holdings in Roche and Lonza were the top two contributors. Lonza rose after reporting a smaller-than-expected decline in first-half profit and maintaining its FY’24 outlook. Roche was strong after reporting upbeat first-half results and raised its FY’24 guidance on EPS. The company also unveiled promising early-stage results for its oral weight-loss drug, consequently dragging down our holding in Novo Nordisk given the perceived competitive threat. Conversely, ASML traded weakly as semiconductor names faced sustained pressure following soft guidance from several semiconductor companies and news the US is considering implementing further trade restrictions on China in relation to semiconductor chips.
On a rolling 12-month basis, the Trust recorded NAV and share price returns of 12.8% and 14.9% respectively, compared to 11.3% for the index.
