New unconstrained European equity fund from Fidelity

Fidelity International has launched the Fidelity Funds European Special Situations Fund, an unconstrained and concentrated equity fund within the Fidelity SICAV.

The new pan-European equity fund will be run by Fehim Sever, a former research analyst who has been with Fidelity for almost 7 years and has 10 years industry experience. For the past 12 months Fehim has run a similar fund for Canadian investors, delivering an 18.1% return compared with -3.4% from his benchmark index - out performance of 21.5%.

FF European Special Situations is an unconstrained fund with a broad remit and an expected tracking error of between 8% and 12%. Fehim intends to run a high conviction, concentrated portfolio of between 35 and 50 holdings, using a blend of thematic and bottom up stock picking opportunities. He will look for companies where he believes the potential for structural growth or for change are underestimated or where there is an anomaly in valuation multiples or methodology.

Extending the frontiers

The FF European Special Situations portfolio will have a wide geographical coverage and look to exploit opportunities in the markets of New Europe – Eastern, Central and South-Eastern Europe, in particular the Baltics, Russia, Turkey and Greece. This reflects Fehim’s view that there are attractive investment opportunities to be found in this part of the region with strong long-term structural earnings drivers.

New UCITS III powers

Like the managers of other funds in the Fidelity Special Situations range, Fehim can make use of derivatives and other financial instruments now available under the UCITS III regulations. Fehim will use these powers gradually and on an opportunistic basis. They are supplementary to the research-driven stock-picking that is the engine of the fund and will enable him to look for stock specific returns on both the long and short side.

Extending the Fidelity European equity range

FF European Special Situations is at the upper end of the risk spectrum in the Fidelity range of European equity funds. Its closest comparable fund is European Aggressive, another unconstrained and concentrated fund.

The full SICAV range is as follows:

Core funds

FF Euro Blue Chip - FF European Larger Companies

Core Plus funds

FF European Growth - European Dynamic Growth

Unconstrained

FF European Aggressive - FF European Special Situations

Michael Jones, Head of Financial Institutions at Fidelity International, says: ”Fehim was one of our highest rated analysts and now has a proven record as a portfolio manager, achieving magnificent performance in 2007. We believe the European Special Situations Fund has the fund manager, remit and flexibility to be a top-performing fund in the years ahead, exploiting the opportunities in developed European markets as well as the extraordinary demographic and economic developments in newer European and near-European markets.”