Fidelity European Trust PLC (LON:FEV) monthly factsheet for January 2023.
Portfolio Manager Commentary
Continental European equities advanced over the month, supported by falling natural gas prices as the mild winter meant that the anticipated energy crisis failed to materialise. Optimism surrounding China’s economic reopening supported markets. This, coupled with slowing headline inflation in the US and Europe, raised hopes of a softer economic slowdown, especially after confirmation that the eurozone economy narrowly avoided falling into a recession in the Q4 of 2022.
The release of upbeat corporate results helped ease some worries about profits being hit by higher borrowing costs. However, the European Central Bank President continued to signal the need for higher interest rates to return inflation to 2%. From a style perspective, growth stocks outperformed value names, while mid-cap stocks outperformed their small and large-cap counterparts.
Over the month the Trust recorded positive returns but marginally underperformed the index. Stock selection in the financials and health care sectors weighed on returns, although security selection contributed to performance in the utilities sector. At a stock level, the holding in energy company TotalEnergies fell as oil prices came under pressure. Semiconductor business ASML was a notable contributor as the company posted strong Q4 results.
On a rolling 12-month basis, the Trust recorded NAV and share price returns of 9.9% and 7.8% respectively, compared to 4.7% for the index.
Fidelity European Trust PLC (LON:FEV) is a European investment trust. It aims to be the cornerstone long-term investment of choice for those seeking European exposure across market cycles.