Fund Profile

Fidelity European Trust 17 January 2025

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Fidelity European Trust. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
FEV has delivered consistent outperformance and strong dividend growth…
Overview

Fidelity European Trust (FEV) is a core European equity fund with a long and consistent track record of outperformance, with an NAV total return over the last five years of c. 54%, significantly ahead of the benchmark, c.35%, and Morningstar Europe peer group, 34%. The size of an investment trust is a hot topic for many investors, and FEV’s market cap of c. £1.4bn means it is the largest European equity investment trust and a constituent of the FTSE 250 index. Cementing its status as a ‘core’ holding, FEV also scores well in our risk and downside protection analysis shown in the Performance section.

The team managing FEV focus on stock picking and their analysis shows that the bulk of returns over the long term come from this focus. Although FEV does not have a specific equity income objective, the management team look at the sustainability of dividends and dividend growth as important factors, and FEV’s dividend has grown every year under manager Sam Morse’s tenure, beginning in 2011. FEV’s yield is 2.4%.

FEV’s Gearing is currently c. 13% and this is approximately the level that investors should expect most of the time. The team does not try to time markets or dynamically adjust gearing, and the trust will typically be geared by this amount. Instead, gearing is held at around this level as the team’s internal analysis that this offers the best risk/reward match to the investment strategy over the long term.

The discount is currently c. 8%, and this has held at a consistently narrower level than the Morningstar Europe peer group, currently c. 10%, over the long term. The board has historically used share buybacks when the discount has widened beyond 10%, most recently in 2022.

FEV has been awarded a Kepler ‘Growth’ rating for 2025.

Analyst's View

It’s not hard to make a list of negative concerns about Europe, nevertheless, Europe collectively is an important equity market home to some key global companies and FEV’s status as the largest ‘core’ European equity trust with an impressive track record should place it high on the list for any investor seeking to build a diversified portfolio.

With that in mind, and with the caveat that FEV is not specifically designed as an equity income trust, its dividend growth record is also impressive, well ahead of inflation over more than a decade, and in our view FEV could make a good addition to an equity income portfolio, providing some diversification and an engine for income growth that higher yielding trusts might struggle to keep pace with.

As we enter 2025, a key area of concern for investors in European equities relates to potential trade tariffs with the US. It’s no surprise that this is a live discussion within the FEV team, but their focus has always been on stock picking and like any other potential challenge for markets they are analysing this in terms of the individual stocks in the portfolio, rather than at a macro level. As a generalisation though, the portfolio is populated by companies with diverse global revenues, and the trust is naturally underweight in companies that appear particularly at risk, such as automotives and spirits. As ever, uncertainties in stock markets can create volatility and provide investors with a good opportunity to initiate or add to a position in FEV.

Bull

  • Consistently strong performance track record driven by a focus on stock picking
  • Dividend growth significantly ahead of inflation over the long term
  • FEV’s scale may help reduce the impact of fixed and trading costs

Bear

  • Generally weak sentiment toward Europe could continue into 2025
  • Shorter-term uncertainty over the new US administration could lead to volatility
  • Gearing can amplify losses as well as gains
Continue to Portfolio
2025 Kepler Growth Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for growth... Find out more

Fund History

12 Feb 2025 Lies, damned lies, and statistics
The impact of the pandemic in 2020, and interest rates in 2022, will have a profound effect on performance data in March this year...
17 Jan 2025 Fund Analysis
FEV has delivered consistent outperformance and strong dividend growth…
08 Jan 2025 Kings of the castle
We reveal the winners of our 2025 investment trust ratings…
31 Jul 2024 Strength in diversity
The UK may offer higher yields, but at what cost?
15 May 2024 Why'd you have to go and make things so complicated?
European growth may be more complicated, and positive, than we suspected...
07 May 2024 Fund Analysis
FEV, impressive capital and dividend growth over many years...
24 Apr 2024 Is ESG finished?
Two of our analysts debate whether it’s time to give up on ESG…
17 Jan 2024 Top of the Pops
We reveal the winners of our investment trust ratings for 2024…
07 Jun 2023 Under pressure
We identify the equity trusts which have delivered the best downside protection in recent years...
05 Jun 2023 Fund Analysis
Fidelity European Trust: core, risk-averse European equity exposure...
19 Apr 2023 Are we nearly there yet?
We look at which trusts have done best year to date, and ask where there may be value…
11 Jan 2023 Solving the Rubik’s Cube
We reveal the winners of our investment trust ratings for 2023…
01 Jun 2022 Investing in Europe with investment trusts
How closed-ended funds can help you invest in Europe…
18 May 2022 Riding out the storm
We look at trusts with tightly governed discounts which may appeal to investors in volatile markets…
09 Sep 2021 What next for European equities?
After a strong period for European equity markets, we ask whether this trend can continue…
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
07 Jan 2021 Fund Analysis
FEV offers investors a balanced exposure to European equities, with a strong performance record and dividend yield…
20 Nov 2019 Making the grade: Kepler's rated trusts report strong performance in 2019
Earlier this year, we launched our new ratings for income and growth. Since then, the 40 trusts to have been awarded the elite Kepler Trust Intelligence ratings have performed strongly…
04 Nov 2019 Fund Analysis
Having been at the helm of the portfolio for over eight years, Sam Morse has proven himself as one of the better managers in the European sector…
24 Apr 2019 Nothing compares to EU
Currently one of the financial world's most unloved regions, we look at the sectors that are unique to Europe and how the persistent pessimism has presented attractive opportunities…
28 Nov 2018 Every cloud...
The endless grinding negativity of Brexit has driven investors away from Europe in scores, but some managers see rich pickings for those willing to take the risk...
26 Nov 2018 Fund Analysis
Fidelity European Values aims for long-term capital growth via a portfolio of European equities, managed with a conservative stockpicking approach...
20 Sep 2017 Back to School…
Tim Stevenson, manager of the Henderson Euro Trust, discusses the economic and political backdrop for European equities…
30 Aug 2017 Smoke and mirrors?
We analyse whether investors should really focus on discounts and premiums when making their investment decisions...
25 Jul 2017 En Garde!
Following a significant reversal in fortunes over the course of 2017, we analyse the outlook for the high-flying European equity market and the trusts that focus on it...
29 Jun 2017 Brave new world
We find out how the outlook appears today to you, and ask the top managers in each sector, region and asset class where they see the opportunities in it...
20 Jun 2017 Fund Analysis
A conservatively managed large cap equity portfolio which aims for companies that can grow their dividend consistently...
03 Feb 2017 Analysis: What next for European ITs?
Our analysis shows that European investment trusts have in recent years delivered strong returns to investors from their current discount, but risks abound in 2017...
23 Nov 2016 Head-to-head: Four trusts that stack up well against their open ended counterparts...
We highlight the trusts that have outperformed their open-ended equivalent in NAV and price terms, have cheaper charges and are trading at wide discounts to their own history...
19 Sep 2016 Europe: A contrarian investor's view...
Political chaos in Europe provides an opportunity to acquire exposure to some of the world’s largest multinationals at a significant discount...
View all

Welcome to Kepler Trust Intelligence

Please enter a valid email address
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid email address
{{item.msg}}
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
To ensure that we are able to provide content which is appropriate for you, please tell us a little about yourself.
Please choose an option
{{item.msg}}
Please enter a company name
{{item.msg}}
Please enter a location name
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a platform
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a trust
{{item.msg}}
See benefits
A free Kepler Trust Intelligence account allows you to access premium content including the ‘Kepler View’ – our verdict on the trusts we cover – and historical research so you can see how our view has changed over time. An account also unlocks useful facilities like the ‘follow’ button which lets you keep track of the trusts you’re interested in and as a logged in user you can also download PDFs of our research, and choose the layout of the page you’re reading to suit your preference. We will not share your details unless you give us permission to do so, and we won’t bombard you with emails – we only send one a week.
Please select an option
{{item.msg}}
Please enter your first name
{{item.msg}}
Please enter your last name
{{item.msg}}
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid password
{{item.msg}}
?
The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
Please confirm
{{item.msg}}
Please select an option
{{item.msg}}
How will this information be used? Your answers help us to tailor our content to relevant investment trusts, and to ensure that the asset allocation and portfolio strategy research we produce is appropriate to our userbase.
Our Website uses Cookies Cookies are small text files held on your computer. They allow us to give you the best browsing experience possible and mean we can understand how you use our site. Some cookies have already been set. You can delete and block cookies, but parts of our site won’t work without them. By using our website you accept our use of cookies. For further information please refer to the Kepler Privacy Notice.
Need help?

One more thing...

Did you know, you can 'follow' individual trusts on Kepler Trust Intelligence? Use the functions below to set up alerts and we'll send you research and updates on your chosen trusts.

Suggested trusts to follow

Browse all funds
Need help?
Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.