The Tip Sheet

The Telegraph thinks Fidelity European can continue to deliver in the years ahead while Shares Magazine says Scottish American provides an opportunity to pick up high-quality assets on the cheap.

ByFrank Buhagiar•14 May, 2024•

Questor: Loyalty to this outperforming trust is poised to be rewarded

Can you name an equity investment company that delivered a 17% capital return over the past year – oh and the fund does not hold any of the Magnificent 7 megatechies? Answer: none other than Fidelity European (FEV), the outperforming trust in the above-titled Questor Column. And the outperformance is no one-off. According to The Telegraph tipster, which first recommended the trust in April 2023, FEV has generated a 100% total return over the last five years, outperforming the FTSE World Europe ex-UK index’s 64% with room to spare.

And with interest rates cuts on the near-term horizon and the economic outlook improving across the region – the International Monetary Fund (IMF) is pencilling 0.8% growth for the Eurozone economy this year and 1.5% for 2025 – Questor believes FEV is well placed to continue delivering in the years ahead.

Not that FEV necessarily needs Europe to pick up as a large number of the companies the fund invests in are global players. There’s healthcare’s poster child Novo-Nordisk, for example, semiconductor co. ASML and consumer goods giant Nestle. The trust is therefore not overly dependent on the prospects for the European economy. The article does note FEV’s high level of concentration – the top-ten holdings account for nearly half of the portfolio – high concentration can lead to high share price volatility. Questor is not put off though. It says this is ‘a price well worth paying for the prospect of continued index outperformance. Questor says: buy.’

Take advantage of Scottish American’s discount to NAV to pick up quality companies on the cheap

Shares Magazine gives Scottish American (SAIN) or SAINTS the once over and likes what it sees. Firstly, shares in the Ballie Gifford run global equity income fund can be bought at a discount to net assets – the shares are currently trading at an 8% discount. That means investors can gain exposure to a portfolio of ‘high-quality assets on the cheap’. High-quality assets? As at 29 February 2024, SAIN’s top-ten holdings included the likes of Novo Nordisk, Microsoft and Taiwan Semiconductor.

The above holdings are the product of the fund’s strategy which is to identify and invest in stocks that generate steady long-term growth and dividends. It’s an approach that has worked well for legendary investor Warren Buffett. And one that has worked well for SAIN in the past. Over the last 10 years, SAIN has delivered a +12.4% compound annual return. If that’s not enough, there’s always the fund’s track record of dividend growth. ‘2023 saw the trust deliver its 50th consecutive dividend increase.‘ In terms of dividends at least, the SAINTS go marching on.