Shah steps down from Fidelity Special Values

Funds and Investment Trusts July 9, 2012 by Ruth Emery

Sanjeev Shah has stepped down as manager of the Fidelity Special Values investment trust to concentrate solely on the Fidelity Special Situations fund, which has been suffering since he took it over from Anthony Bolton four years ago.

He will be replaced by Alex Wright, manager of the Fidelity UK Smaller Companies Fund.

Fidelity says the change is also due to the investment trust board wanting to invest more in smaller and medium-sized companies.

Lynn Ruddick, chairman of Fidelity Special Values, comments: ‘We respect the wishes of Sanjeev Shah to focus exclusively on his open-ended fund and the board would like to thank him for his diligent management of the portfolio in what has been a particularly challenging period in equity markets.’

Shah took on the Special Values trust and the open-ended Special Situations fund from legendary investor Bolton in 2008. But he has struggled to emulate Bolton's successful style. Over the past three years to 1 June the Special Values trust has only returned 9 per cent compared to a sector average of 28 per cent for the UK growth sector. The Special Situations fund has returned 18 per cent, placing it in the bottom quartile in the UK all companies sector.

Earlier this year Fidelity dropped the Special Situations fund from the list of funds it recommends to investors, while many brokers have also slashed their ratings on the fund.

The Special Values trust is currently on a discount of 13.8 per cent. Wright will take over the trust on 1 September.

Wright has worked at Fidelity for more than a decade and managed the UK Smaller Companies fund since it launched in February 2008. Over the past year it has lost 1.8 per cent although the difficult market conditions means it has done well against its peer group, placing it 10th among 55 UK smaller companies funds.

Ruddick says the board is excited at the opportunity to broaden the trust's appeal to 'a wider group of shareholders who are seeking the security of quality large-cap stocks as well as the potentially higher growth of carefully-researched smaller companies'.

Adrian Lowcock, senior investment adviser at Bestinvest, says the announcement isn't that surprising as Shah's performance has been disappointing for a while.

'Shah hasn't set the world alight, especially considering he was Bolton's protégé; without Bolton's mentoring he has struggled. Although the poor performance has also coincided with a massive financial crisis,' he comments.

Lowcock says Wright is a good smaller companies manager but managing Special Values could prove a challenge as he will also have to manage large companies too.

He adds: 'We've removed our "sell" rating from Special Values [so now it has no rating], as our ratings refer to the actual manager, and we'll give Wright a fresh canvas for when he starts in September. For Shah on Special Situations this really is his time to start performing.'

Lowcock says existing investors in Special Values should be patient and wait and see how Wright performs, while investors considering buying the investment trust should wait until Wright has started to see if he can improve performance before they part with their money.

For more detail on how Shah has performed since taking over from Bolton, click here

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