# Fidelity European Trust: A commendable performance in a difficult year

- Link: https://www.directorstalkinterviews.com/fidelity-european-trust-a-commendable-performance-in-a-difficult-year/4121107708
- Published: 2023-02-24T08:06:40+00:00
- Author: Amilia Stone

In our most recent note, Continued resilience in difficult markets | Hardman & Co(
hardmanandco.com), published on 23 November 2022, we analysed how **[Fidelity European Trust plc](https://www.directorstalkinterviews.com/company/fidelity-european-trust/fev.l)**(
[LON:FEV](https://www.directorstalkinterviews.com/company/fidelity-european-trust/fev.l))
had performed YTD, and highlighted a few of the macro issues that dominated the 
European equity markets during 2022. In this note, we look back at the 2022 performance,
putting it in its longer-term historical context and comparing it with FEV’s peer
group performance in 2022. We touch briefly on the outlook for 2023, but we also
remind investors that FEV’s long-term track record is driven by bottom-up stock 
selection.

 * **Difficult year for equity markets:** Despite the very challenging year for 
   most equity markets, on a rolling 12-month basis, the Trust recorded NAV and 
   share price returns of -3.6% and -3.8%, respectively, compared with -7.0% for
   the primary benchmark index. In our view, this is commendable amid volatile and
   downward-trending markets.
 * **Relatively good performance:** In this report, we put the 2022 performance 
   in the context of Fidelity European Trust’s historical performance and compare
   it with the performance of its peer group. We also remind investors that FEV’s
   managers are stock-pickers that focus on company fundamentals. This is where 
   FEV’s long-term value comes from.
 * **Valuation:** 99.9% of investments are valued using quoted prices in active 
   markets (95% is realisable within five days). The NAV is “real” – so any discount
   is anomalous. The current discount of 7.4% is below the long-run averages, and
   below that of FEV’s peer group, which is warranted, given the much better performance.
 * **Risks:** FEV has seen periods of underperformance when its investment style
   has been out of favour – typically, when the market’s preference has been for
   lower-quality, more cyclical stocks. Worries around performance are bound to 
   resurface, given the current rotation, as well as the outlook for interest rates
   and inflation.
 * **Investment summary:** Fidelity European Trust has outperformed its peers, benchmarks
   and UK indices over most time periods. Sentiment to Europe may vary – although
   we believe there is a perception vs. reality issue here. The current market jitters
   may lead to some return volatility, but, in our view, FEV’s long-term track record
   in a wide range of market conditions should reassure investors that the fund 
   will not deviate from its tried-and-tested, long-term process and philosophy.

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