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Edison Investment Research

Leading International Investment Research

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Equity Bottom-Up

Fidelity European Values / Equity Bottom-Up

Edison Investment Research is terminating coverage on Codere (CDR), Fidelity Asian Values (FAS), Fidelity China Special Situations (FCSS), Fidelity European Trust (FEV), Fidelity Japan Trust (FJV), Fidelity Special Values (FSV), Orège (OREGE) and Silence Therapeutics (SLN). Please note you should no longer rely on any previous research or estimates for these companies. All forecasts should now be considered redundant.

Edison Investment Research is terminating coverage on Codere (CDR), Fidelity Asian Values (FAS), Fidelity China Special Situations (FCSS), Fidelity European Trust (FEV), Fidelity Japan Trust (FJV), Fidelity Special Values (FSV), Orège (OREGE) and Silence Therapeutics (SLN). Please note you should no longer rely on any previous research or estimates for these companies. All forecasts should now be considered redundant.

Fidelity European Trust - Termination of coverage

Fidelity European Trust (FEV, formerly Fidelity European Values) seeks to achieve long-term growth in both capital and income from a portfolio comprising mainly continental European stocks. FEV’s managers, Sam Morse and Marcel Stötzel, note that the coronavirus crisis has temporarily marginalised many fundamentally strong and resilient European companies. They believe this has created abundant new opportunities for long-term investors such as FEV to benefit as these companies recover and re-rate over time. The trust’s ambition to be the cornerstone investment of choice for investors seeking European exposure across market cycles is supported by its very solid outperformance over the long term. In addition, FEV’s dividend has increased every year since 2010 and the board intends to maintain dividend increases during the current crisis, drawing on reserves if necessary.

Fidelity European Trust (FEV, formerly Fidelity European Values) seeks to achieve long-term growth in both capital and income from a portfolio comprising mainly continental European stocks. FEV’s managers, Sam Morse and Marcel Stötzel, note that the coronavirus crisis has temporarily marginalised many fundamentally strong and resilient European companies. They believe this has created abundant new opportunities for long-term investors such as FEV to benefit as these companies recover and re-rate over time. The trust’s ambition to be the cornerstone investment of choice for investors seeking European exposure across market cycles is supported by its very solid outperformance over the long term. In addition, FEV’s dividend has increased every year since 2010 and the board intends to maintain dividend increases during the current crisis, drawing on reserves if necessary. 

Fidelity European Trust - Outperforming and pursuing recent opportunities

Fidelity European Values (FEV) plans to change its name to Fidelity European Trust later this year to better reflect its objectives; however, there will be no change to the disciplined investment process. Manager Sam Morse continues to focus on cash-generative companies with strong balance sheets and significant dividend growth potential. He has increased the trust’s level of gearing to benefit from an anticipated recovery in the European stock market, as equity prices typically discount an economic improvement by around six months. However, the manager is continuing to run the portfolio in a measured way, acknowledging that ‘there is no big rush to change the portfolio, as costly mistakes can be made’. FEV has outperformed the continental European market over the last one, three, five and 10 years in both NAV and share price terms.

Fidelity European Values (FEV) plans to change its name to Fidelity European Trust later this year to better reflect its objectives; however, there will be no change to the disciplined investment process. Manager Sam Morse continues to focus on cash-generative companies with strong balance sheets and significant dividend growth potential. He has increased the trust’s level of gearing to benefit from an anticipated recovery in the European stock market, as equity prices typically discount an economic improvement by around six months. However, the manager is continuing to run the portfolio in a measured way, acknowledging that ‘there is no big rush to change the portfolio, as costly mistakes can be made’. FEV has outperformed the continental European market over the last one, three, five and 10 years in both NAV and share price terms.

Fidelity European Values - Following the same tried-and-tested strategy

Fidelity European Values (FEV) is managed by Sam Morse, who selects stocks on a bottom-up basis, focusing on quality companies with strong balance sheets that are able to grow dividends over the long term. He notes that investor concerns that affected the market in 2019 are abating: central banks are very supportive; a resolution to the US-China trade war is looking more likely; and within Europe, there is the prospect of fiscal stimulus to support economic growth. While there is potential for a rotation in market leadership towards cyclical stocks, which could put the fund’s relative performance under pressure, the manager is ‘sticking to his knitting’, and remaining disciplined, rather than shifting his portfolio exposures in an effort to try to ‘time the market’.

Fidelity European Values (FEV) is managed by Sam Morse, who selects stocks on a bottom-up basis, focusing on quality companies with strong balance sheets that are able to grow dividends over the long term. He notes that investor concerns that affected the market in 2019 are abating: central banks are very supportive; a resolution to the US-China trade war is looking more likely; and within Europe, there is the prospect of fiscal stimulus to support economic growth. While there is potential for a rotation in market leadership towards cyclical stocks, which could put the fund’s relative performance under pressure, the manager is ‘sticking to his knitting’, and remaining disciplined, rather than shifting his portfolio exposures in an effort to try to ‘time the market’.

Fidelity European Values - Disciplined process driving outperformance

Fidelity European Values (FEV) aims to achieve long-term capital and income growth from a portfolio of primarily continental European equities. Although well diversified, the portfolio became more concentrated during 2017, as the manager sold stocks that had performed well and reinvested in existing holdings. While retaining a positive net market gearing, the manager added 10 single-stock short positions to the portfolio in August 2017, reflecting the view that valuations had become stretched in many parts of the market. A lower 0.75% management fee on assets over £400m takes effect from April 2018, while a reallocation of fees and expenses from revenue to capital will positively affect the level of future dividend payouts.

Fidelity European Values (FEV) aims to achieve long-term capital and income growth from a portfolio of primarily continental European equities. Although well diversified, the portfolio became more concentrated during 2017, as the manager sold stocks that had performed well and reinvested in existing holdings. While retaining a positive net market gearing, the manager added 10 single-stock short positions to the portfolio in August 2017, reflecting the view that valuations had become stretched in many parts of the market. A lower 0.75% management fee on assets over £400m takes effect from April 2018, while a reallocation of fees and expenses from revenue to capital will positively affect the level of future dividend payouts.

Fidelity European Values - Concentrating its portfolio and hedging its bets

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