17th June 2013
Fidelity’s Anthony Bolton, arguably the UK’s most famous fund manager has announced he is to retire from the business next year writes Philip Scott.
Bolton ran the Fidelity Special Situations fund from 1979, until he stepped down at the end of 2007. During his near-three decade tenure of the portfolio, where he specialised in investing in undervalued and unloved stocks, he delivered annualised growth of some 19.5% – or turned a £1,000 lump sum investment into £147,000.
Such is Bolton’s influence that his opinions are widely viewed as a bellwether for the markets. But the star fund manager has not been able to keep hold of his golden touch in regards to the Fidelity China Special Situations investment trust, which he has run since its launch in 2010, which had a much more difficult time. Its initial success gave way to a longer period of underperformance, although set against a background of a falling Chinese market. Over the past three years to end of May, the China portfolio has returned just 2% while the MSCI China index has achieved 8%.
Mark Dampier, head of investment research at Hargreaves Lansdown, says: “Anthony has had a fantastic career; he is rightly regarded as one of the best active managers of recent decades. His China fund’s performance in recent years has tarnished this record slightly, though it has shown signs of recovery in the past year.”
Dale Nicholls is to succeed Bolton as manager of the Fidelity China Special Situations fund, in April next year. Nicholls has 17 years’ experience of Asian markets, starting first at Banker’s Trust Asia Securities in Tokyo in 1994 before joining Fidelity in 1996 as a research analyst. Since 2003 he has been managing Asia Pacific mandates. These include Fidelity Funds Pacific Fund from September 2003 in addition to Asian Smaller Companies Fund since December 2011.
In terms of what Bolton’s current investors should do, Dampier says: “Anthony Bolton remains at the helm of the fund for the time being, and the transition to Dale Nicholls looks to be well organised. We see little reason to sell, particularly given present low valuations in the stock market and we think that China is a long-term growth story.”
Since Nicholls took over, the Fidelity Funds Pacific fund, it is up 154% versus an index of 117%. Some 30% of the fund is currently invested in China. More interestingly the fund shares 33 of the companies found in the Fidelity China Special Situations, which accounts for 47.2% of Fidelity China Special Situations.
Dampier adds: “It is not surprising to find they share a relatively common investment style in looking for long term cash generative businesses, under researched by the market and thus cheap, typically found in mid to small cap area. Both fund managers will work more closely together from the beginning of 2014. From this date no new purchases will be made without Dale’s approval, so the changeover should be seamless.”
The original Fidelity Special Situations fund which Bolton had managed was split in two in 2006, when it was some £6bn in size, at the time, the largest fund in the UK. One half, which focused on Bolton’s core area – UK stocks – continued to be run by him until the end of 2007, when he handed over management to Sanjiv Shah. The other half of the portfolio was given a wider mandate, and became the Fidelity Global Special Situations fund, to be run by Jorma Korhonen.
Korhonen parted company with Fidelity in late 2011. The fund had heavy exposure to banking and financial stocks and was battered by the financial crisis. Since launch until his departure in March 2012, the portfolio lost 3% while the average global fund was up by 17%. Jeremy Podger has now taken over the global fund. Shah has had a far better time, over the past five years his portion is up by 54%.
Fidelity is hosting an interview with Anthony Bolton and Dale Nicholls on the investment trust section of its website.