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FEV has delivered consistent outperformance and strong dividend growth

Kepler

Kepler - Trust Intelligence

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.