A tempting discount at Fidelity European Values

Most Eurozone economies came out of recession earlier, and with a greater degree of vigour than expected, which resulted in a move towards higher risk segments of the economy on the part of investors. The Fidelity investment trust's allocation, however, remained skewed towards non-cyclical defensive sectors, such as healthcare, despite the incipient economic recovery. The trust also declined to re-instate gearing during the middle part of last year, which reduced its capacity to benefit from the rally in European equity markets.

The spectre of unsustainable sovereign debt in 'Club Med' countries is casting a shadow over European markets generally. Last year, Mr Benerji reduced exposure to peripheral markets such as Greece and Spain, in favour of more fiscally robust economies like Germany and France. As the current year plays out Mr Benerji's relative caution may well prove prudent.

Currently, the fact that the trust's share price has been marked down on the back of last year's underperformance, has left it trading at a very tempting discount of 13.9 per cent. It is also worth noting that the trust, which has previously been managed by Anthony Bolton, has the best performance metrics in its sector over the past 10 years.

Source: Thomson Datastream & *Morningstar

Performance as at 23 April 2010

Top ten holdings (as at 28 February)

Sector breakdown