FEV’s investment objective is to achieve long-term capital growth from a portfolio of listed shares in continental European companies. The portfolio manager is not restricted in terms of market cap, country or sector allocation, although a minimum of 80% of gross assets will be invested in companies from countries that are included in the benchmark index (the FTSE World Europe [ex-UK] Index). A maximum of 5% of gross assets may be invested in non-European companies that have some European exposure or connection.
Fidelity European Values (FEV) has had a conspicuously strong period of outperformance since March 2017, building on its positive long-term track record. Its NAV total return is ahead of the AIC Europe sector average over one, three and five years, ranking first or second out of eight over each period, and FEV has clearly outperformed its benchmark over one, three, five and 10 years to end-May 2019. Helped by a reallocation of expenses between the revenue and capital accounts, the board raised the FY18 dividend by 44.4% to 6.28p – representing a 2.5% yield – while also adding to reserves, and an interim dividend will be introduced in FY19. FEV’s discount has narrowed to 8.3%, similar to the sector average of 8.5% but wider than its five-year low of 2.8%, and from 2019 the board is seeking to maintain the discount in single digits in normal market conditions.