The Fidelity European Opportunities fund is shifting its emphasis towards mid-cap growth companies, ...
The Fidelity European Opportunities fund is shifting its emphasis towards mid-cap growth companies, especially those in the technology, media and telecoms sector.
Thierry Serero, manager of European Opportunities, said the fund has always had a bias towards growth stocks and has typically favoured companies which are undergoing change such as restructuring.
He said: "I would not describe my investment style as either growth or value. I believe the market is quite efficient in valuing most companies and therefore I do not judge absolutely the level of valuation. What I am interested in is the potential variation in valuations and I look for companies whose valuation will be rising and avoid the ones where I believe it will be declining in the future.
"I am not interested in a stock just because it is cheap but only if there is a catalyst for re-rating. I will not sell a stock because it is too expensive unless I have the awareness that its valuation is about to decline as a result of negative newsflow or deteriorating fundamentals."
As a result of this approach, more recently Serero has been shifting the fund towards those companies benefiting from the major trends taking place in Europe, including technology, globalisation, EMU, and an ageing population.
These changes have caused companies to review their business models and operations, which has then lead to and increase in mergers and acquisitions.
He said: "A new wave of change is affecting even more the shape of European markets. As soon as the effect of launching the euro had passed companies had to face an even bigger revolution, the internet. It is one of the most interesting times from a stock market point of view.
In 1998 there were 367 IPOs and in 1999 there were 447, most of them related to the internet. Most of these companies will probably fail but the virus of enterpreneurship is there to stay and it will change forever the face of European business."
Serero said it was not as simple as saying electronic banks will be the winners or that traditional banks will lose out in the new economy.
It is the companies that show their ability to transform and adapt to the new markets and the new economies that that will make the difference in choosing the winners and losers in Europe, he said.