Investors are becoming worried about the outlook for the global economy, and rightly so, says Sam Morse, who runs the £1.2bn Fidelity European Values investment trust.
The trust returned 0.68 per cent in the six months to 30 June, compared with a loss of more than 3 per cent for the average trust in the AIC Europe sector in the same time period.
Mr Morse said the major reason for his trust performing better were investments in energy and technology companies.
But he said investor sentiment towards the region is "waning", as the outlook for the global economy worsens at the same time as share prices are high.
Mr Morse’s comments were contained in the half year results for the trust, covering the period to 30 June 2018, which were published yesterday (1 August).
But while the performance of his trust was boosted by investments in energy stocks as commodity prices rose, he said those very price rises were negative for the economy.
Mr Morse said: "Input costs, such as oil and wages, continue to rise which may put further pressure on the margins of continental European companies.
"The profit cycle may be peaking at a time when there is little valuation support in equities and at a time when interest rates and bond yields are rising which drains the liquidity that has supported equity markets since the global financial crisis."
He said protectionist policies such as those presently favoured by Donald Trump were also likely to be negative for global stock markets.
But Marcus Brookes, head of multi-manager investments at Schroders, said Europe was one of his favoured markets right now as it is earlier in the economic cycle than the US, which in practice means it is further away from the time when interest rates will rise, which is generally positive for equities.
Jonathan Davis, who runs Jonathan Davis Wealth Management in Hertford, said he remained "bullish" on equities, because, when measured against inflation, equity market returns in the years 2000-09 were negative, so the subsequent bull market should continue for longer than the period of the traditional length of time bull markets usually last.
He said changes are happening in the global economy that are far more important than the policies of Donald Trump, or of Brexit, so those political events should not determine investors' thinking.
The Fidelity European Trust trades at a discount to net assets of 9.9 per cent.