Fidelity Advisor Europe Fund
The Fidelity Advisor Europe Fund Class A (FHJUX) seeks to grow capital over the long-term by “normally investing at least 80% of assets in securities of European issuers and other investments that are tied economically to Europe.” The fund’s management believes in investing in quality companies available at a discount to their fair value. Its bottom-up stock picking focuses on investing in companies with “proven business models, wide competitive moats and access to scarce or intangible resources (e.g., properties, cost structure, R&D, brands, company culture and management).”
The fund’s assets were spread across 80 holdings as of September 2015, and it was managing assets worth $1.4 billion as of October-end. As of the September portfolio, its top ten equity holdings included Sanofi (SNY), Shire (SHPG), B shares of Novozymes (NVZMY), Lloyds Banking Group (LYG), and Prudential (PUK). The top ten holdings formed 23.6% of the fund’s portfolio.
For this analysis, we’ll consider holdings as of September 2015 as that’s the latest available sectoral breakdown with us. The holdings after September reflect valuation-driven changes to the portfolio and not the actual holdings.
The fund’s portfolio has undergone quite a bit of change in the one-year period ended October 2015. Financials continue to remain the top invested sector. However, exposure to these stocks surged from 21.5% a year ago to over 31% at present. A lot of fresh securities have also been added. Additionally, quite a few securities have been liquidated, some very quickly after purchase. In a few cases, the weight of existing securities has been increased.
The weight of stocks from the healthcare sector has also risen over the past year. The fund’s management has exited a lot of positions and invested in new securities. The sector continues to be the second-largest holding in the fund’s portfolio.
Industrials have had the same treatment as healthcare. A lot of turnover can be seen at the granular level.
Consumer staples and energy are on the other side of the fence, with weights being reduced over the course of the period. Management sharply reduced exposure to consumer staples stocks. The sector used to form over 14% of the fund’s assets a year ago but now barely makes the 3% mark. Meanwhile, energy stocks were eliminated from the portfolio sometime in 2Q15. Energy stocks used to form over 6.5% of the portfolio a year ago.
How did the FHJUX fare in October? Let’s look at that in the next article.