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How the Fidelity Advisor Europe Fund Allocated Its Portfolio in 2015

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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 management believes in investing in superior-quality companies that are available at a discount to their fair value. Its bottom-up stock picking focuses on investing in companies that have “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).”

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The fund’s assets were spread across 79 holdings as of December 2015, and the fund was managing assets worth $1.4 billion as of the end of December. As of November, its equity holdings included Shire (SHPG), B shares of Novozymes (NVZMY), Publicis Groupe (PUBGY), Lloyds Banking Group (LYG), and Sanofi (SNY).

Historical portfolios

For this analysis, we will be considering holdings as of November 2015, when the fund most recently made its sectoral breakdown available. The holdings after November reflect valuation-driven changes to the portfolio, not the actual holdings.

Financials have the most weight in FHJUX’s portfolio. The consumer discretionary and industrials sectors follow, in that order, and form a combined 37% of the fund’s assets. Apart from these three, only the healthcare sector’s weight reads in double digits. The fund doesn’t have holdings in the energy or telecom services sectors. The fund manager exited the energy sector in 2Q15.

Consumer discretionary has overtaken the healthcare sector for the second spot in the fund’s portfolio. Industrials have maintained their third position while healthcare has been relegated to the fourth position. Compared to a year ago, exposure to discretionary stocks has gone up sharply. Meanwhile, exposure to consumer staples stocks has gone down sharply. The fund manager has increased the weight of the information technology and materials sectors as well.

The turnover of the fund is on the higher side. All sectors have seen quite a bit of change in 2015. A lot of fresh securities have been added while quite a few have been liquidated, some very quickly after purchase.

Has the fund’s stance helped it in 2015? Let’s look at that in the next article.

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