Fidelity European Trust PLC (LON:FEV) monthly factsheet for the period ended 28 February 2023.
Portfolio Manager Commentary
Continental European equities edged higher in February, on a better outlook for the region’s economy and corporate earnings. The European Commission (EC) raised its growth forecast for both the European Union and the eurozone. The EC also added that the region is likely to avoid a recession this winter, helped by easing gas prices on the back of warmer weather. As a result, inflation forecasts for both this year and the next came in lower than expected, which boosted investor sentiment. The ECB maintained its hawkish stance and raised its key deposit facility rate by 0.50 percentage points to 2.5% as widely expected. Meanwhile the US Fed signalled that it could keep its monetary policy tighter for longer than anticipated.
During the month, the Trust recorded positive returns but underperformed the index. The underperformance was driven by disappointing positioning in the consumer staples and discretionary sectors plus financials and industrials. Nestle was the biggest stock level detractor after the company reported below consensus 4Q22 organic sales growth. Positively, overweight positions in the health care and materials sectors drove gains. The biggest contributor was Legrand, a French manufacturer of electronic components after they posted solid Q4 results and announced a 15% dividend raise.
On a rolling 12-month basis, the Trust recorded NAV and share price returns of 14.4% and 14.6% respectively, compared to 10.0% 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.
