Morse took over as lead manager on 1 January but is being supported by former manager Sudipto Banerji until the end of the year.
The trust is the largest European-focused investment trust with a market cap of £441m and since the start of 2012, its NAV has fallen just 8%, compared to 18% from the benchmark.
In an analyst note published today, Winterflood said during the period the fund has been the second best performing fund in the Europe sector.
"Despite this outperformance, at a discount of 14% the fund still trades at one of the widest discounts in the sector. We believe this discount provides a very good entry point, particularly given its mainstream European portfolio. If the trust’s outperformance can vbe maintained, then shareholders could get the double benefit of NAV growth and a tightening discount."
Previously managed by Anthony Bolton from 1991 until 2001 and then Tim McCarron from 2001 until 2008, the appointment of Morse brought both the closed-end fund and the open-ended equivalent under the same steward.
Closed over open-ended
"The portfolio consists of between 50 and 60 holdings and there is a large overlap with the open-ended fund. The few differences that do exist are mainly due to the investment trust’s smaller size and therefore ability to invest in less liquid stocks," Winterflood said.
"The portfolio has a high level of active money at around 80%, with no underweight positions held. The turnover rate for 2011 was 48%; however this includes the manager repositioning the portfolio after taking charge. The current portfolio turnover is likely to be around 25% to 30%," the note continued.
The analysts believe that on a long term view the Fidelity European Values trust is an attractive fund, particularly given its size.
With a very similar portfolio and the same manager it expects performance to be broadly in line with that of the open-ended fund and so the current discount could provide an "arbitrage opportunity" for holders of the open-ended fund.
