Page 12 - DIY Investor Magazine | Issue 31

FIDELITY EUROPEAN TRUST PLC: SAM MORSE SHARES HIS THOUGHTS ON THE TRUST’S 30TH ANNIVERSARY Sam Morse Portfolio Manager, Fidelity European Trust PLC To mark the 30th anniversary of the launch of the Fidelity European Trust PLC What Investment’s Editor-in-chief Lawrence Gosling spoke to the current lead portfolio manager Sam Morse. Lawrence Gosling (LG): You’ve been managing the trust for the past 11 years and earlier in your career you were an analyst researching ideas for the portfolio. How has the investment landscape changed for European equities in the past three decades? Sam Morse (SM): The big change for Europe in the past 30 years is the same for all investment markets, and certainly the UK, and that is globalisation. In 1991, you were largely investing in companies that were exposed to domestic Europe and did all their business there. Amazingly, I think less than 50% of the earnings and profits of European companies these days come from Europe. The big multinational European companies, some of which have been regularly in the fund and have been very successful compounders, are businesses that are very much global in their nature, and probably to do less business in Europe than the index as a whole. Investing in Europe really is about investing in companies not in the economy, which is a good thing because the European economy has been somewhat sluggish during this period. ‘WE HAVE AN INCREDIBLE IN-HOUSE RESEARCH DEPARTMENT WITH ABOUT 40 ANALYSTS COVERING EUROPE’ The other key element that has been consistent is the level of support we get from the Fidelity team of analysts. We have an incredible in-house research department with about 40 analysts covering Europe. That wasn’t the case in 1991, although I’m proud to say I was one of the analysts who was looking at Europe at that time and I hope I made a small contribution in those early years. I did a quick calculation based on average tenure and I reckon approaching 250 different analysts have contributed to this fund over that 30-year period I think that’s one of the key differentiators from other European investment trusts and what has led to the very attractive return. LG: How would you describe your approach? SM: My particular focus is on dividend growth and trying to identify attractively valued companies that will grow over time. The one thing all the trust’s managers have had in common is a focus on stockpicking, rather than worrying about the macro or what will happen going forward in the European economy. This is what has helped the Trust return 13.9% p.a. over that 30 year period (NAV return net of fees). LG: The trust has only had four portfolio managers in its 30-year history. There are not many football clubs who can point to that level of consistency. SM: It started with Anthony Bolton, followed by Tim McCarron, Sudipto Banerji and then myself as lead manager since January 2011. I have two senior colleagues, Cristina Dondiuc, an investment director who leads our client servicing activities, and Marcel Stötzel, who is the co-portfolio manager. We have all employed different stockpicking techniques, but with the same objective of finding good companies in Europe. Past Performance Net Asset Value Share Price FTSE World Europe ex-UK Total Return Index Oct 16 - Oct 17 18.90% 26.40% 19.90% Oct 17 - Oct 18 0.80% -0.80% -5.60% Oct 18 - Oct 19 14.20% 17.90% 11.50% Oct 19 - Oct 20 -0.70% 0.70% -4.20% Oct20- Oct 21 36.00% 35.40% 33.80% Past performance is not a reliable indicator of future returns. Source: Morningstar as at 31.10.2021, bid-bid, net income reinvested. ©2021 Morningstar Inc. All rights reserved. DIY Investor Magazine · Nov 2021 12