Fidelity European Trust, Kepler investment fund research (LON:FEV)

Fidelity European Trust plc (LON:FEV) has announced new research by Kepler Trust Intelligence.


Fidelity European Trust (FEV) follows a long-term disciplined investment approach that emphasises selecting stocks that can grow their dividends. Rather than being a traditional equity income fund, the team see a company’s dividend as a starting point to assess its strengths, rather than as an end in itself. This comes from a key observation that companies that can grow their dividends tend to outperform those that cannot. The implementation of a strategy around this observation has generated long-term outperformance that is characterised both by outperformance in rising markets, and resilient performance in falling markets. The team do not expect, however, for performance to come in short bursts of large outperformance; rather, a compounding of incremental outperformance.

FEV is managed jointly by Sam Morse and Marcel Stötzel. Sam has managed FEV since 2011 and has been at Fidelity for more than 20 years. Sam and Marcel are supported by a team of 174 global analysts, as well as a large team of sustainability specialists.

FEV is currently geared at c. 13%, which is the highest it has been under Sam’s tenure. Sam and Marcel are not concerned with market timing, so any decisions to increase or decrease gearing relate to their views on the prospects for their portfolio companies. Given the very large universe of stocks they have to pick from, their relatively concentrated portfolio of 40 to 50 stocks and the often global nature of company revenues, they are also less concerned that specific economic forecasts for Europe are key to their success.

FEV has a current dividend yield of 2.2% and a good track record of increasing its dividend over time. The current discount of 5% is narrower than average, following a period of very strong positive performance. The FEV board has used buybacks when the discount has widened into double digits, this happening as recently as 2022.

Analyst’s View

FEV has a market capitalisation of c. £1.4bn, meaning its shares are relatively liquid and it has economies of scale. In turn, this means that its tiered management fee structure has a real impact on overall costs. Given that FEV also has an impressive and consistent long-term performance record, that opening line might seem like faint praise, but these things can really matter for long-term investors.

For some investors, what also really matters is that a fund can limit the downside in more difficult markets, while still capturing outperformance in better times. The team has done a really good job of this. FEV is not, to be clear, an absolute return fund, but a very strong emphasis on downside risks for portfolio companies has led to good relative performance in down markets.

Although the team are very much focussed on stocks, rather than any attempt to time markets, it is notable that FEV’s gearing is at its highest level since Sam became the trust’s manager in 2011, i.e. almost 13%. This reflects the change in gearing policy that was flagged in the 2020 annual report. FEV’s long-term consistent outperformance, its size and the team’s risk-averse investment style means that, in our view, it makes a strong claim to being the core European equity investment trust.

Fidelity European Trust is a European investment trust. It  aims to be the cornerstone long-term investment of choice for those seeking European exposure across market cycles.

Click to view all articles for the EPIC:
Or click to view the full company profile:
Share on facebook
Share on twitter
Share on linkedin
Fidelity International

More articles like this

Fidelity European Trust

A more resilient, competitive and sustainable Europe

In a Communication adopted today, the Commission provides a contribution to the forthcoming leaders’ debate in Granada on the future-oriented approach to the EU’s open strategic autonomy and on priority policy objectives for the EU in the years

Fidelity European Trust

European stocks edge slightly higher

European stocks edged slightly higher after Monday’s drop, with investors wary of making bets ahead of this week’s central bank meetings. Brent oil’s rally to $95 triggered worries about inflation spiking again, but boosted the energy sector. The

Fidelity European Trust

European shares edge higher ahead of ECB rate decision

European shares inched higher on Thursday, with investors cautious ahead of the European Central Bank’s rate decision where it is likely to raise interest rates for a tenth consecutive time. Markets are now pricing in a 65% chance

Fidelity European Trust

European stocks climb on China stimulus taking hold

European stocks climbed, bolstered by signs China’s stimulus measures are seeping through into the economy and wagers that global interest rates are approaching a peak. The Stoxx 600 gauge rose 0.9%, halting three days of losses. Gains were

Fidelity European Trust

European stocks rise as investors eye global data

European stock markets were higher Friday, as investors await a key U.S. jobs report. The regional Stoxx 600 index opened flat before moving to a 0.3% gain, with almost all sectors in the green. Oil and gas stocks climbed 1.8%

Fidelity European Trust

European stocks follow Asian markets higher

European stocks followed Asia higher on Tuesday, as recent efforts by Beijing to prop up markets bolstered China-linked sectors, while investors prepared for US labour market data due later in the day.  Europe’s region-wide Stoxx Europe 600 index

Fidelity European Trust

European stocks follow Wall Street higher

European and Asian equities advanced on Tuesday, following an overnight rebound in Big Tech stocks on Wall Street as investors anticipated the sector would post strong corporate results this week. Europe’s region-wide Stoxx 600 rose 1.2 per cent,

Fidelity European Trust

European stocks rise

European stocks made gains on Monday, with investor focus shifting to the tech sector and away from China’s slowing post-pandemic recovery and flagging property market. The region-wide Stoxx 600 rose by 0.1%, recovering from early losses. France’s Cac

Fidelity European Trust

European stocks end slightly higher 

European stocks edged higher on Monday as investors awaited key inflation figures from across the globe this week to gauge the outlook for interest rates, while the defence sector rose to record highs amid rising geopolitical uncertainty. The

Fidelity European Trust

European stocks rise on cooling inflation

European shares ended higher on Monday, helped by gains in healthcare stocks and a report showing euro zone inflation eased further in July, though upbeat growth data tempered optimism about a rate hike pause. The pan-European STOXX 600 (.STOXX) ended

Fidelity European Trust

European shares rise amid earnings rush

European shares rose on Thursday, as traders reacted to a busy morning of earnings reports and awaited the European Central Bank’s policy decision after the U.S. Federal Reserve hiked interest rates as expected. The pan-European STOXX 600 index .STOXX rose

Fidelity European Trust

European stocks slightly higher

European stock markets were slightly higher on Tuesday morning, as investors focused on earnings. The benchmark Stoxx 600 index was up 0.19% at 10:00 a.m., with most sectors higher. Telecom stocks fell 1.6%, while health-care led gains, up 0.6%. British

Fidelity European Trust

European shares rise

European shares ended higher on Tuesday amid investor hopes the U.S. Federal Reserve was nearing the end of its interest rate hiking cycle and as China extended some policy measures to support its battered real estate sector. The

Fidelity European Trust

European stocks extend first-half gains

European stocks extended gains on Monday, led by cyclical sectors, as signs of cooling US inflation fueled appetite for risk assets. The Stoxx Europe 600 Index added 0.2% by 10:52 a.m. in London. Miners, energy and banking stocks

No more posts to show