Fidelity European Trust PLC (LON:FEV) monthly factsheet for the period ended May 2023.
Portfolio Manager Commentary
Continental European equities retreated in May, amid weakening economic data from China and concerns that US policymakers may not reach an agreement to extend the Federal debt limit. Markets welcomed the “debt ceiling deal” at month end, but sought safety in risk-off sectors following downbeat economic readings from China. European markets were also hurt as Germany, the region’s largest economy, edged into recessionary territory in the first quarter of the year. The European Central Bank delivered the expected rate hike of 0.25% in May, following a modest cooldown in core inflation in March and the continued rapid tightening in lending.
In May, the Trust recorded negative returns but outperformed the index. The outperformance was driven by favourable positioning in technology, and strong stock picking in financials and health care. At a stock level, Dutch chipmaker ASML rose, as semiconductor businesses gained after US chipmaker giant NVIDIA reported upbeat quarterly results and forecasts, anticipating a surge in demand for artificial intelligence chips. Private equity company 3i Group reported annual revenue growth of 30% for FY22. The strategy employs an active, bottom-up stock picking approach, which focuses on finding attractively valued companies that can deliver sustainable dividend growth over time.
On a rolling 12-month basis, the Trust recorded NAV and share price returns of 13.6% and 17.5% respectively, compared to 8.5% 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.