turnover levels remain stable as tim mccarron steps into anthony bolton's shoes at fidelity
Turnover in the Fidelity European Values trust has remained steady since the portfolios moved from Anthony Bolton to Tim McCarron early this year.
The trust has also retained its focus on fringe economies in the eurozone and mid and small cap companies.
McCarron, who is in the process of taking over Bolton's European unit trust, said: 'As with the European Values transition, my priority is to work closely with Anthony on a smooth transition, and in particular minimise fund transaction costs.'
He said investors should draw a comparison between the fund handover, due to be completed in January 2003, and that of the investment trust.
He said: 'One statistic I want to share with you is that the turnover ratio on European Values stayed constant at 70% throughout the handover period. I intend to make changes to portfolios only as necessary and in line with the historical rate of turnover.'
Looking forward for the European markets, McCarron said many eurozone economies have not benefited from the introduction of the euro.
He said: 'A number of core eurozone economies have grown more slowly than the periphery and are now flirting with negative growth rates, while peripheral economies such as Spain and Ireland are still showing healthy growth.'
The UK, not in the eurozone at all, is somewhere in the middle in growth terms and the outlook appears stable.
McCarron added: 'This theme has translated itself into the portfolio construction of European Values and European Fund ' you can see the overweight of the faster-growing peripheral eurozone countries at the expense of the core eurozone.'
In market-cap terms, Fidelity European Values and Fidelity European are both oriented to the smaller and mid cap end of the market at the expense of the large caps.
'This is not because McCarron has a strong view that large caps as a group will consistently underperform, but more driven by the fact that the group's higher conviction ideas and best potential upside are to be found by looking actively in the second liners and less-researched stocks for good ideas.
He added: 'Going forward, I expect that a bias towards mid and smaller capitalisation companies will be maintained in both of these funds.'
Describing his style as similar to Bolton's, McCarron said: 'A key element of my investment approach is buying undervalued stocks, but slavishly following this approach is not very consistent. In fact it did not work at all well through the early part of the 90s.'
He said, because the value of different measures of value alters over time, he uses many measures to look for low price to book, low P/E and high dividend yield potential holdings.
'Just following a single measure of value such as yield and buying and selling to exploit mis-valuation, is not on its own a winning strategy.'
'For that reason, I also look for companies where I can buy growth at a reasonable price, and particularly where fundamentals are improving.'
In that he is supported by an in-house research team of around 50 analysts looking at stocks across Europe seeking out companies where earnings and prospects are underappreciated by the market and where growth is unrecognised.
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