Fidelity European Trust: Financial stocks and gearing drive December outperformance

Fidelity European Trust PLC (LON:FEV) monthly factsheet for the period ended 31 December 2023.

Portfolio Manager Commentary

Continental European equities extended gains in December as cooling inflation figures in the eurozone and the US fuelled investor optimism. As expected, the European Central Bank (ECB) left interest rates unchanged and reiterated its commitment to maintain restrictive levels for as long as necessary, despite lowering its inflation forecasts for 2023 and 2024. However, dovish comments
from ECB official Isabel Schnabel, who is seen as the most influential voice in the conservative camp of policymakers, supported European equities.

During the month, the Trust outperformed the index, driven by strong stock picking in financials. The Trust’s use of gearing was also a source of strength. Gains were somewhat limited by weaker stock picking in consumer discretionary. Within financials, private equity and infrastructure focused asset manager EQT was the biggest stock level contributor. Shares gained amid news that EQT made the strongest offer for a stake in the German Football League’s soon to be created media rights company. Holdings in 3i Group and Partners Group also contributed marginally to relative gains. Conversely, German sportswear business Puma fell along with peers after Nike cut its annual sales forecast.

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