3rd September 2013
Fidelity Special Situations, one of the most popular UK funds among retail investors over the past 30 plus years is to once again endure a manager change as its current boss, Sanjeev Shah, is to step down writes Philip Scott.
Alex Wright, manager of the Fidelity UK Smaller Companies fund, will take over, when Shah leaves the fund at the end of the year.
Shah took over the reins from Anthony Bolton in January 2008 who had run the fund from 1979, until 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 per cent – or turned a £1,000 lump sum investment into £147,000.
But the star fund manager was unable to keep up with his past performance, when it came to running 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 under-performance. Bolton is now due to retire next year.
As far as Shah following in Bolton’s footsteps goes, according to Mark Dampier, head of research at fund broker Hargreaves Lansdown, the “economic timing couldn’t have been worse”.
But while Shah’s time in the driving seat has been testing, especially during 2010 and 2011 as its holdings in banks and other economically sensitive areas fell, his aggregate performance has been ahead of the average UK fund. Since he took over at the start of 2008, the portfolio has achieved a return to its investors of 50 per cent, more than comfortably ahead of the average UK fund return of 29 per cent for the period.
What should investors in the Fidelity Special Situations Fund do now?
Dampier believes investors willing to take a long-term view, and ride out periods of stock market volatility, should stick with the Fidelity Special Situations Fund, and it will remain on Hargreaves Lansdown’s, preferred fund list, it’s so-called Wealth 150.
According to Dampier, the new manager Alex Wright follows the same contrarian / value approach the fund is known for, which ensures a good degree of consistency. Wright has been with Fidelity for 12 years. As an analyst, he worked closely with the two previous managers of the fund. He began to manage client assets in 2008 with the launch of the Fidelity UK Smaller Companies Fund. In 2010 he broadened his remit to the full market-cap spectrum and began to work more closely with Sanjeev Shah on the Fidelity Special Situations Fund.
Dampier says: “In September 2012 Alex Wright took over the Fidelity Special Values investment trust from Sanjeev Shah. Our analysis shows that in this relatively short period of time his performance has been very good.”
What other UK funds are recommended?
For investors who would prefer an alternative UK fund, Hargreaves Lansdown lists among others, the AXA Framlington UK Select Opportunities Fund and M&G Recovery. Over the past five years they have achieved respective returns of 73 and 56 per cent, against Shah’s 60 per cent.