Fidelity European Trust

FEV’s investment philosophy is broken down into three core principles:

Bottom-up – whereby there is a stock selection focus
Long term – as the team believes long-term thinking reduces costs and improves performance
Cautious – with a focus on managing downside risk


Although this is not an income fund, the dividend forms a core part of the fund’s philosophy. In particular, there is a heavy emphasis on dividend growth. This is because the team believes there is clear evidence that companies which consistently grow their dividend over time outperform. 


A big priority for the fund is preserving client capital relative to the benchmark. Idea generation comes from Fidelity’s European research analysts. Sam and Marcel can also make use of external sources such as company meetings or external analysts and experts.

Potential ideas are initially assessed from four perspectives. The first is positive fundamentals – looking for structural growth, good return on capital and dividend growth prospects; the second is the ability to generate cash; the third is a strong balance sheet, as the managers dislike highly levered companies; and the fourth is an attractive valuation – looking for good quality at a reasonable price.

Sam and Marcel will then meet the company to reinforce conviction in the four areas above. They want companies which can grow their dividends sustainably for at least the next 3 to 5 years. The team then applies Sam’s ‘three good reasons to buy a company’, which include two fundamental reasons combined with one valuation reason. If a company passes all these stages and the ‘three reason test’, they will initiate a position.

The portfolio is then constantly reviewed and if any of the three reasons change, this prompts a review of the stock. The final portfolio will hold 45-60 stocks.

The merger has also resulted in some economies of scale for the trust. This includes a new tiered management fee of 0.70% on the first £400m of net assets, 0.65% between £400m and £1.4bn; and 0.55% above £1.4bn.

Fidelity European Trust is well diversified and is limited to going a maximum of 5% over or underweight different sectors versus the benchmark (MSCI Europe ex United Kingdom). The managers are quite strict in terms of valuation discipline and typically don’t let positions run too much before trimming them back. The trust invests for the long term with a 3 to 5-year time horizon and fund turnover is usually around 20%. The trust’s volatility, and in particular max drawdown, have been considerably lower than the benchmark. It has been able to perform in many different market environments.

ESG analysis is carried out at the fundamental research level by Fidelity research analysts, through the implementation of the Fidelity Proprietary Sustainability Rating. ESG factors are not a major consideration of this trust. However, the managers do cite ESG as a risk factor in terms of how a company treats its customers, employees, shareholders and the wider environment and the impact this has on the sustainability of dividends.

Fidelity European Trust typically has a fixed gearing range of between 10-15% (it has averaged at 10.7% since Sam took over as manager of FEV in January 2011)*.

FEV has traded on an average discount of 6.2% over the past five years*. The merger has resulted in an enhanced discount management policy which will see the board look to maintain the discount in mid-single digits across all market conditions.

*as of 7 January 2026