Sam Morse, the new manager of the Fidelity European Fund, took full control from Tim McCarron on the 1st January following a two month handover period. We recently met with him to further discuss his investment approach and his hopes for building on the fund’s excellent track record.
Although he has not managed a European fund previously, Sam Morse has a good history of running UK funds, most recently Fidelity Moneybuilder Growth from December 2006. He does not consider the move to running a European fund to be a big change, as he is already familiar with European stocks. Indeed, he has often had significant exposure to them whilst running the Moneybuilder Growth Fund, one example being Novo-Nordisk, a Danish company specialising in diabetes treatment. In addition, Fidelity operates an analyst team that jointly covers Europe and the UK, so Sam Morse will be working with the same people as he did before.
It is also encouraging that Fidelity has a good track record of managers making the transition from the UK to European markets – not least the previous managers of this fund, Tim McCarron and Anthony Bolton. However, there are some differences between Sam Morse’s management style and that of his predecessors, which means the fund might develop different characteristics.
In contrast to Tim McCarron, he will tend not to move between stock market sectors depending on the economic picture, preferring instead to build a portfolio based entirely on the characteristics of individual companies. Typically this will lead him to have fewer holdings in the fund, but broader diversification by sector. He also places considerable emphasis on finding companies that reliably grow their dividends over the long term, which will generally mean fewer positions in smaller companies or more speculative areas such as early stage technology or biotech. Many of these portfolio changes have already been made, but it is an ongoing process as Sam Morse is yet to meet with the management of some of the fund’s holdings.
We believe Fidelity European continues to make a good choice for investors wanting long-term exposure to the region. Sam Morse is a capable manager and is likely to do a good job running this large and important fund, so we think most investors should continue to hold. The exception would be those who bought the fund as an adventurous European holding, perhaps when the fund was managed by Anthony Bolton. In our opinion investors looking for a more aggressive alternative could consider New Star European Special Situations Fund run by Richard Pease, which is on our Wealth 150 list of favourite funds in each sector. At the present time we are not re-instating the Fidelity European Fund to the Wealth 150 as we want to give Sam Morse some time to make his mark on the fund.
Key features of the Fidelity European Fund
Key features of the Fidelity Moneybuilder Growth Fund
Although he has not managed a European fund previously, Sam Morse has a good history of running UK funds, most recently Fidelity Moneybuilder Growth from December 2006. He does not consider the move to running a European fund to be a big change, as he is already familiar with European stocks. Indeed, he has often had significant exposure to them whilst running the Moneybuilder Growth Fund, one example being Novo-Nordisk, a Danish company specialising in diabetes treatment. In addition, Fidelity operates an analyst team that jointly covers Europe and the UK, so Sam Morse will be working with the same people as he did before.
It is also encouraging that Fidelity has a good track record of managers making the transition from the UK to European markets – not least the previous managers of this fund, Tim McCarron and Anthony Bolton. However, there are some differences between Sam Morse’s management style and that of his predecessors, which means the fund might develop different characteristics.
In contrast to Tim McCarron, he will tend not to move between stock market sectors depending on the economic picture, preferring instead to build a portfolio based entirely on the characteristics of individual companies. Typically this will lead him to have fewer holdings in the fund, but broader diversification by sector. He also places considerable emphasis on finding companies that reliably grow their dividends over the long term, which will generally mean fewer positions in smaller companies or more speculative areas such as early stage technology or biotech. Many of these portfolio changes have already been made, but it is an ongoing process as Sam Morse is yet to meet with the management of some of the fund’s holdings.
We believe Fidelity European continues to make a good choice for investors wanting long-term exposure to the region. Sam Morse is a capable manager and is likely to do a good job running this large and important fund, so we think most investors should continue to hold. The exception would be those who bought the fund as an adventurous European holding, perhaps when the fund was managed by Anthony Bolton. In our opinion investors looking for a more aggressive alternative could consider New Star European Special Situations Fund run by Richard Pease, which is on our Wealth 150 list of favourite funds in each sector. At the present time we are not re-instating the Fidelity European Fund to the Wealth 150 as we want to give Sam Morse some time to make his mark on the fund.
Key features of the Fidelity European Fund
Key features of the Fidelity Moneybuilder Growth Fund
