Fidelity European Trust PLC (LON:FEV) monthly factsheet for August 2024.
Portfolio Manager Commentary
The month started with big negative equity market moves prompted by the Bank of Japan’s decision to increase interest rates by 25 basis points in early August, and subsequent unwind of ‘carry trades’ that had relied on cheap Japanese debt to fund investments in global risk assets. Market sentiment was also impacted by weak US economic data. Specifically, a small increase in the unemployment rate sparked fears of a US recession. However, Continental European equities, along with other equity markets, recovered through the month and ended higher in August but underperformed the US market.
The Trust marginally underperformed the index in August. The underperformance was driven by weak stock picking in the healthcare and consumer discretionary sectors with gearing also contributing modestly to the underperformance. The Trust’s holdings in ASML and Puma were the top two detractors. ASML’s shares were impacted by the overall weakness in the semiconductor sector after the US chipmaker Intel reported disappointing earnings and announced a cost-cutting plan to reduce jobs and suspend dividend payments. The Trust’s holding in PUMA was weak after the company reported lacklustre Q2’24 results. However, the Trust’s exposure to Deutsche Börse added value after the company announced settlements with some plaintiffs related to Postbank acquisition lawsuits. Elsewhere, luxury conglomerate Hermès and low-cost airline Ryanair were also modest contributors.
On a rolling 12-month basis, the Trust recorded NAV and share price returns of 17.1% and 14.8% respectively, compared to 15.8% for the index.
