Fidelity European Trust plc (LON:FEV) is a £1.5bn FTSE 250 investment trust providing investors with a core European equity strategy. FEV’s managers have generated superior performance on a consistent basis over many years, and under Sam Morse’s tenure, beginning at the start of 2011, the NAV total return is c. 305 %, compared to the benchmark’s c. 164%. This has contributed to FEV winning a Kepler Growth Rating for 2024. As well as generating strong performance, FEV scores well in our analysis of factors such as risk and downside protection, which are shown in the Performance section. FEV has a relatively concentrated portfolio of stocks, in the range of 40–50, and the team is primarily concerned with stock picking over making sector bets, with historical analysis showing that the bulk of returns come from individual stocks.
While the trust is not an equity income trust, the team’s strategy places value on companies that pay growing and sustainable dividends, which means that FEV does produce a dividend somewhat higher than the average for its peer group and has a current yield of 2.2%. FEV has increased its dividend every year for the last 13 years, which coincides with Sam’s tenure as manager.
FEV is geared c. 13%. The team does not try to time markets or dynamically adjust gearing, and the trust will typically be geared in the range of 10–15%. This is based on an analysis of what the best gearing for the strategy would be over the long term.
Fidelity European Trust is currently trading at a discount of c. 4%, narrower than the Morningstar Europe peer group average of c. 9%. Historically, the FEV board has acted when the discount is wider than 10% and utilised its buyback powers, most recently in 2022.
Fidelity European Trust PLC (LON:FEV) aims to be the cornerstone long-term investment of choice for those seeking European exposure across market cycles.
