4th Aug 2020 09:54
(Alliance News) - Fidelity European Values PLC said Tuesday it outperformed its benchmark for the first half of 2020, due to a strong portfolio performance driven by stock picking.
For the six months to the end of June, the Europe-focused investor reported a net asset value total return of 3.0%, compared to the FTSE World Europe excluding UK Index, which made a negative return of 1.9%.
Fidelity European's net asset value per share as at June 30 was 280.88 pence, up 3.7% from 270.90p the same date the year before.
Fidelity European said its resilient performance was due to its focus on companies with strong balance sheets, particularly during the first quarter as equity markets fell, while in the second quarter, the trust benefited from a slight increase in gearing.
Among the outperformers in the portfolio, Swedish Match rose on strong first-quarter results based on the ongoing success of nicotine pouch business Zyn, while business closures as a result of the pandemic meant traffic-related companies, such as MTU Aero Engines AG and Atlantia Spa fared poorly, as did contract caterer Sodexo SA.
Fidelity European declared an interim dividend of 2.60 pence per share, up 0.4% from 2.59p the prior year.
"The second half of this year is likely to be testing; not least because the pandemic is not yet over. Herd immunity or a vaccine are distant on the horizon so further waves and lockdowns appear inevitable. Central banks and governments are doing their utmost to support economies, and markets, but in doing so are potentially creating new problems for the future. Many companies that would otherwise have gone out of business will limp along, with reduced levels of staffing, such that many industries will continue to be oversupplied," said portfolio manager FIL Investments International.
"Presidential elections in the United States, not to mention the negotiations around a new relationship between the United Kingdom and the EU, have the potential to create moments of panic or relief in the second half of this year," the portfolio manager added.
Shares in Fidelity European Values were marginally higher at 260.10 pence on Tuesday in London.
By Dayo Laniyan; [email protected]
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