Fidelity European Values has attributed the company’s underperformance to its defensive stance last year.
The £597m trust returned 11.3% for the year ending 31 December 2009, compared to 19.1% for the FTSE World Europe ex UK index.
Run by Sudipto Banerji, the trust has opted to pay an interim, rather than final dividend of 22.5p per share, compared to last year’s final dividend of 23.26p.
Departing chairman Robert Walter says the trust’s cautious approach hampered returns.
“The major factor behind this weak relative performance was the portfolio’s commitment to stocks with strong balance sheets and resilient profits.
“The best-performing stocks were, however, more volatile companies with rather weaker fundamentals,” he says. “Another factor in 2009 was our approach to gearing. While the board was right to remove all gearing back in September 2007, it would, with the benefit of hindsight, have been more profitable to have reinstated the gearing last March.”
However Walter believes the manager’s investment strategy will perform well over the long term.
“I believe this approach and our concentration on stocks with stronger balance sheets will bear fruit and will in turn contribute to further outstanding longer-term performance,” he says.
