Fidelity Funds has increased its European fund range to six funds with the introduction of its European larger companies fund.
This Luxemburg-based Sicav will invest more than 50 per cent in a portfolio of larger European companies, with the remainder going into high-growth medium-sized companies.
The fund will be managed by Frederic Gautier, who will aim to outperform the fund's benchmark index, the MSCI Europe index. Gautier joined Fidelity in February 1994 as an analyst and has seven years' experience managing European portfolios. When selecting stocks for the portfolio, he will be assisted by a team of 60 analysts across Europe. They will look for companies that have good prospects for high earnings growth.
Fidelity thinks that UK investors who want some degree of diversification in their portfolio are more likely to go for European funds, particularly large cap fund which are less risky than smaller companies. However, larger companies have less scope for growth, so they are unlikely to deliver returns that are as high as smaller companies.
European stocks have rallied on occasions in the last few weeks and factors such as the adoption of the euro currency and the move towards a more integrated Europe will create stockpicking opportunities.
However, the conflict against Iraq has added to investors concerns as economic uncertainty continues and this may have a negative impact on investors' confidence.
According to Standard & Poor's, the Fidelity Funds European growth fund is ranked seventh out of 221 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to September 23, 2002.