Ian Cowie: two trusts riding high on Europe’s resurgence
With European shares roaring ahead of their US rivals, our columnist highlights two investment trusts offering exposure to new tech and big pharma.
27th March 2025 09:50
by Ian Cowie from interactive investor

New technology, same old stock market, as yesterday’s losers become today’s winners and European shares bounce back from years of underperformance to trounce their American rivals. Never mind the generalities; can you name the most valuable company on the Continent?
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Probably not, unless you work in corporate information technology, which illustrates why investment trusts are an easy and effective way for most of us to gain exposure to and keep abreast of fast-moving technologies. Better still, from my selfish point of view, this business happens to also be the most valuable underlying asset in Fidelity European Trust Ord (LSE:FEV), my biggest investment trust exposure to the continental Europe.
Step forward, SAP SE (XETRA:SAP), the €313 billion (£261 billion) German software giant that was originally called Systemanalyse und Programmentwicklung (System Analysis Program Development). It claims to be the world’s biggest supplier of digital software and services to other businesses and last week its stock market capitalisation - or the value of all its shares - overtook that of Novo Nordisk AS ADR (NYSE:NVO), the Danish maker of the weight-loss drugs Wegovy and Ozempic.
To be fair, not many Brits had heard of Novo Nordisk when I began writing about it in February 2021, after investing in the American Depositary Receipts at $36, allowing for a subsequent two-for-one share split, before rolling into the underlying stock at Danish krone 254 in June 2021. I am jolly glad I sold half of them at DKK 926 last August, as reported at that time, because the threat of Trump tariffs subsequently cut the share price to DKK 500 on Wednesday this week.
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That’s why, knowing nothing about business-to-business digital software on the cloud or elsewhere, I won’t be chasing SAP shares directly but might increase my exposure to FEV. This £1.9 billion investment trust is the top performer in the Association of Investment Companies (AIC) “Europe” sector over the past decade and ranks third over five years and one-year periods, with total returns of 175%, 114% and 4.7% respectively.
FEV’s recent muted performance might present a good entry point, if you expect returns to revert to the mean or long-term average. This is a good time to consider that possibility, with European shares roaring ahead of their formerly dominant American rivals.
To be specific, the Nasdaq index of New York-listed technology shares has slipped 3.4% lower this year and a broader measure of the American market, the Standard & Poor’s 500, is 1.7% beneath where it was on 1 January. Meanwhile, the CAC 40 index of French equities has risen by 9.6% and the DAX benchmark of German shares has soared by 15% over the same period.
FEV’s failure to fully capture the recent recoveries in Frankfurt and Paris might merely reflect the downside of diversification, which can reduce returns as well as risks.
While usually reliable websites suggest its top holding remains Novo Nordisk, the trust’s own factsheet shows that SAP is its most valuable asset, followed by another continental technology giant, ASML Holding NV (EURONEXT:ASML), the Dutch maker of machines to make microchips or semiconductors. Novo Nordisk is third and Roche Holding AG Bearer Shares (SIX:RO), the Swiss pharmaceutical company, fourth.
Essilorluxottica (EURONEXT:EL), the Franco-Italian eyewear company that owns Oakley and Ray-Ban, plus Nestle SA (SIX:NESN), the Swiss firm that is the most valuable food company on this planet, also feature in FEV’s top 10. That looks good to me, as does FEV’s dividend income of just over 2%, rising by an annual average of 7% over the past five years. If this rate of ascent can be sustained, which is not guaranteed, FEV shareholders’ income would double in a decade. Here and now, the ongoing charge is reasonable at 0.77% and the shares remain priced 4% below their net asset value (NAV).
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Followers of more recent form may prefer JPMorgan European Growth & Income Ord (LSE:JEGI), which is the top performer over the past five-year and one-year periods, plus it pays more than twice as much income, 4.2%, which is also rising much more rapidly, at an annual rate of 17%. If that rate of increase could be sustained, shareholders’ income would double in four years and three months. However, it is important to remember that dividends are not guaranteed and can be cut or cancelled without notice.
Even so, it remains a historical fact that JEGI delivered total returns over the standard three periods of 146%, 172% and 16% from a £555 million portfolio led by SAP, followed by ASML, with Novartis AG Registered Shares (SIX:NOVN) in third position. Novo Nordisk and Nestle also feature in JEGI’s top 10. Ongoing charges are lower than FEV’s, at 0.66%, and JEGI trades at a bigger discount; 5.6% below its NAV.
Both these investment trusts demonstrate that you don’t need to cross the Atlantic, just the Channel, to get exposure to pharmaceuticals or new technology. Both sectors are well represented in Europe, even if the corporate names are less familiar.
Ian Cowie is a freelance contributor and not a direct employee of interactive investor.
Ian Cowie is a shareholder in EssilorLuxottica (EL), Fidelity European (FEV), Nestlé (NESN) and Novo-Nordisk (NOVO) as part of a diversified global portfolio of investment trusts and other shares.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.