Fidelity European Trust PLC (LON:FEV) monthly factsheet for the period ended August 2023.
Portfolio Manager Commentary
Continental European equities retreated over August, having seen positive returns in the preceding summer months. Investors remained cautious about the possibility of further monetary tightening from the European Central Bank on the back of mixed inflation data from the Euro area and US. August saw higher-than-expected inflation figures in France, Germany and Spain. Overall, the data points to sticky inflation, indicating that monetary tightening may last longer. There were also concerns around slowing growth in China, however, policy support to boost its capital markets reassured investors. On an encouraging note, preliminary data showed the eurozone economy expanded marginally by 0.3% in the second quarter, improving from the lack of growth in the previous quarter.
During the month, the Trust delivered negative returns and performed in line with the index. Security selection in health care and consumer discretionary added relative value. Conversely, stock picking in financials detracted from returns, though some of these losses were offset by the overweight allocation to the sector. Not holding UBS proved to be the biggest detractor from relative returns as the shares outperformed over August.
Our focus is on finding attractively valued companies with good prospects for cash generation and dividend growth over the longer term. On a rolling 12-month basis, the Trust recorded NAV and share price returns of 17.8% and 26.7% respectively, compared to 15.8% 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.
