In just a fortnight's time Anthony Bolton, Fidelity's legendary fund manager, will step down from running his UK Special Situation's fund for good.
His move comes at a pivotal time for Fidelity, which for years has been the UK's most popular fund manager among private investors. Not anymore. It has lost its crown, albeit only just, as the nation's favourite fund manager to Invesco Perpetual which now as £30.6bn under management compared to Fidelity's £30.5bn.
It has been a troubling year for Fidelity. It has made several fund manager changes, while the performance of several funds, including UK Growth, European and American, has been substandard causing many investors to vote with their feet. What's more millions of pounds has been withdrawn from Bolton's fund ever since it emerged that he would be stepping aside more than two years ago.
Bolton's departure was always going to be a blow for Fidelity. Afterall, here is a fund manager that has turned £1,000 into a staggering £147,000 over the past 28 years. But Bolton's imminent retirement from running money directly (he is to carry on at Fidelity as a mentor) has been a long drawn out affair - it comes a full 28 months after the company announced that he was stepping down splitting his famous Special Situations fund in two.
In September 2005 the group announced its intention to split Bolton's Special Situations fund into a UK Special Situations and a Global Special Situations fund, with Bolton running one half and an unnamed manager running the other.
Nine months elapsed before Fidelity confirmed Jorma Korhonen would be running the Global fund and a further three before the split happened. It was only four months ago that Fidelity confirmed that Sanjeev Shah would be given the almighty task of stepping into Bolton's shoes and would take over UK Special Situations in the New Year.
Not surprisingly, the saga drew criticism from financial advisers, many of which ditched Bolton's half of the fund off their buy lists immediately, while Korhonen's new global fund didn't even make it on many. Those that made the decision to exclude Korhonen's half of the fund from their recommendations has been justified so far.
Performance has been steady if unspectacular. Since it was launched in September 2006 the Global Situations fund has returned 18.6 per cent compared to the average global fund which is up 17.4 per cent giving it a ranking of 56 out of 153 funds.
"When Fidelity announced they would be making a series of major changes to their Fidelity Special Situations fund, we immediately put the fund on hold," says Darius McDermott at Chelsea Financial Services. "We are not recommending the Global Special Situations fund, instead we have been recommending Artemis Global Growth and Rathbones Global Opportunities."
Graham Frost at Bestinvest, says: "We have not rated the Global fund as we await an identifiable track record. We recommended that clients might prefer other alternatives - Artemis Global Growth and THS International Growth."
With Fidelity UK Special Situations no longer being recommended to new clients by many financial advisers (very few, if any told existing investors to sell) where are they putting their money instead? We talked to some experts to unearth which funds they believe are a suitable substitute for die-hard Bolton fans.
Mick Gilligan, analyst, Killik & Co
"There are relatively few UK equity fund managers with over 25 years experience in the London market - Anthony Bolton is one manager who did have this wealth of experience and we think given the challenging position that markets are in terms of economic, earnings cycle and potential impact of the credit crisis that experience should not be overlooked. We see Nigel Thomas, manager of the Axa Framlington UK Select Opportunities Fund as a suitable replacement. Thomas also has over 25 years experience. His style is somewhat different from Bolton's as he typically seeks out growth opportunities rather than buying into value stocks or bottom fishing in bombed out situations. However, their respective definitions of special situations or select opportunities have a fair degree of overlap".
Graham Frost, chief investment officer, Bestinvest
"Bolton traditionally got significant performance from holding up to 20 per cent in European equities, which is fairly unique. However, managers with a similar style that we recommend are Artemis UK Special Situations, Axa Framlington UK Select Opportunities, Merrill Lynch UK Special Situations and Liontrust First Growth."
Anna Bowes, AWD Chase de Vere
"My Dad will be one of those thanking Anthony profusely for his services over the years! His shoes are giant and will therefore be very hard to fill, however, I take some comfort in knowing that his successors have been handpicked by Anthony himself. The UK Special Situations fund remains on our recommended list. But having said all this, there are some other fund managers that were somewhat eclipsed by Bolton, who have continued to manage money brilliantly - Artemis UK Special Sits run by Derek Stuart, M&G Recovery run by Tom Dobell and Black Rock Merrill Lynch UK Special Sits run by Richard Plackett are just some alternative options in the UK Special situations sector."
Brian Dennehy, Dennehy Weller & Co
"The mid-sized companies that have been such a successful hunting ground for Anthony over many years have underperformed sharply, and we expect this to continue through 2008 - so in retiring from active fund management now, Anthony's nose for good timing has not deserted him. We no longer recommend the fund, and haven't done since Fidelity announced this horribly long drawn-out process. M&G Recovery has been a firm favourite and, unlike Anthony's fund, has continued to outperform the FTSE 100 since the split was announced - we would expect the M&G fund, with a heavy exposure to large caps, to continue to do so in 2008. Rensburg UK Select has also been a favourite and so too has the Artemis Special Situations fund."
Darius McDermott, managing director, Chelsea Financial Services
"We had the Fidelity Special Sits fund on our buy list for many years, and it was a cornerstone of many of our clients portfolios. As alternatives, we have been recommending the M&G recovery fund, Artemis Special Situations and Axa Framlington UK Select Opportunities; on the global side we like Artemis Global Growth and Rathbones Global Opportunities."
Philippa Gee, investment director Torquil Clark
"We haven't been recommending new investors into these funds given the imminent upheaval and we will not be recommending them going forward. Sanjeev still has to prove himself when flying solo on this fund and Jorma operates on a different basis to Anthony. On the UK front I would consider funds such as Rensburg UK Managers Focus, Schroder UK Alpha Plus & Skandia Best Ideas. On the global side I would consider Jupiter Global Managed and Newton Higher Income, as well as New Star Tactical Portfolio for all out risk."
