Archived article: This article was correct at the time of publishing. Tax, investments and pension rules can change over time so the information below may not be current.

More changing of the guard at Fidelity

It has been quite a year of change at Fidelity. First came the announcement of retirement plans for Anthony Bolton, former star manager of its Special Situations fund and latterly its China Special Situations investment trust. And yesterday the firm also announced changes once again to the Fidelity Special Situations fund and also the Fidelity South East Asia fund.

Fidelity South East Asia – Bestinvest four-star rating reaffirmed

In the case of the Fidelity South East Asia fund the change will see existing manager Allan Liu hand over the fund to Teera Chanpongsang in the new year, with Liu focusing on other products. Both managers are based in Hong Kong.

Our research team has met Teera on a number of occasions and, given his 19-year tenure working with Allan and the strength of the analyst resource and their role in the process, the team at Bestinvest is comfortable with retaining our four-star rating on the fund.

Fidelity Special Situations – the meteoric rise of Alex Wright continues

With regards to the Fidelity Special Situations fund, the current manager Sanjeev Shah will step down from managing money altogether and take on a mentoring role within Fidelity in the new year. This is a move that has some parallels with his illustrious predecessor on the fund, Anthony Bolton, when he initially handed over the reins only to re-emerge as a Chinese equity manager some years later.

While Fidelity Special Situations is just inside the top quartile over five years, Sanjeev Shah has given investors a bumpy ride along the way. After an initially strong start the fund suffered two years of tough performance in large part due to a sizeable position in banks in anticipation of a recovery that failed to materialise within his expected timescale. More recent performance has been strong with the fund earning a top-decile ranking over one year buoyed by the recovery in banking shares and the fact that Shah has no exposure to the troubled mining sector.

Shah’s successor from next January, Alex Wright, has delivered impressive numbers on the Fidelity UK Smaller Companies fund, which soft closed earlier this year. Our analysis suggests he has beaten the small cap index in 72% of the months he has run the fund and outperformed the Numis Small Cap (ex-Investment Trust) index by 59% over five years. However, the mandate of the Fidelity Special Situations fund is a very different one, investing across the entire UK market, and the size of the fund is several times that of his UK Smaller Companies fund.

Alex Wright has had a meteoric rise in a relatively short period from being the manager of a small, capacity constrained smaller companies fund to being handed the Fidelity Special Values investment trust a year ago and soon the reins of a £2.9 billion flagship multi-cap fund. In the view of our research team this is a very material increase in assets under his management and while his tenure to date on Special Values has been encouraging, it is not a forgone conclusion that his process will automatically successfully translate when applied to a broader universe of UK stocks. A degree of caution is therefore appropriate, notwithstanding his stellar record on his existing funds.

Fidelity will understandably be keen to emphasise the consistency of Shah and Wright’s approaches, both of whom are value/contrarian managers – a style which is faithful to the longer-term style and ethos of Fidelity Special Situations. We believe Alex Wright’s approach is likely to be less aggressive than Sanjeev Shah's and it interesting to note that the Special Values investment trust has seen 100% stock turnover since Wright took over the mantle from Shah, albeit this is partially a result of the trust wanting to have a more differentiated portfolio.

The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested.  Prevailing tax rates and reliefs are dependent on your individual circumstances and are subject to change.

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