Fund manager Fidelity has been shaking up the market for three decades.
The investing world was a very different place, thirty years ago, back when US fund giant Fidelity first arrived in the UK. Today, the company looks after about £45 billion in assets for a million investors. In 1979, there were far fewer investment funds than there are today, no PEPs, no ISAs, no index trackers -- and Fidelity launched in the UK with just four unit trusts and 11 people on its investment team.
One of those, of course, was Anthony Bolton, the highly-regarded manager of one of those first four funds -- Fidelity's flagship Special Situations fund.
£1,000 invested in the Special Situations fund at launch would be worth over £145,000 today, points out Gary Shaughnessy, Fidelity's UK managing director. "It's more than twice the return that the next-best returning fund has delivered over the same period," he observes.
Investor-friendly innovations
Over the thirty years that Fidelity has been in the UK, it has pioneered or promoted many innovations. The first UK fund manager to launch a PEP product on to the UK market, the company now reckons to be the largest stocks and shares ISA provider in the UK.
Fund supermarkets certainly didn't exist back in 1979, either: if you wanted to buy into a unit trust, then going directly or through commission-taking intermediaries were the only options. Ten years old this year, Fidelity's FundsNetwork offers low-cost access to funds from over 60 providers.
Fidelity's own MoneyBuilder range of funds, too, was the first in the UK to offer investors 'no-load' access to something beyond a simple tracker -- another innovation.
Special Situations
But time and again, investors are drawn to the stellar record of Anthony Bolton and his Special Situations fund, which delivered a 20% annual return over a 25-year period, compared to 7.7% for the FTSE All-Share Index. (Now managed by Sanjeev Shah since Bolton's retirement -- but 28 years out of 30 surely merits the epithet 'his'.)
Outperforming the benchmark by a factor of almost five, Special Situations is a classic actively managed fund: no closet benchmark tracking here. Indeed, Bolton has made something of a virtue of going against the herd, pointing our repeatedly that he invests based on fundamentals, backed by detailed meetings with company management -- and not based on what's fashionable or 'safe'.
Successor Sanjeev Shah is taking the same stance, pointing out that: "Some people are comfortable running with the herd. I prefer to look for unloved and unfashionable companies. That is where I find 'special situations'.
And so far, one can't quibble with his judgement. Taking on the management of the fund in January 2008, he has since beaten 91% of the funds in his peer group, and has outperformed the index by 8% -- successfully steering the fund through some of the most difficult market and economic conditions of the last century.
Good results, good value
Managing director Gary Shaughnessy, meanwhile, is keen to point out that Special Situations is just one of the funds that the firm manages, and that Bolton and Shah -- while admittedly delivering superior returns -- are Fidelity managers to the core.
"We've always been an active manager," he stresses. "And we've always met with companies, and we've always employed researchers and analysts to get an insight on behalf of investors."
30 years ago, of course, many investment managers would have said the same -- with varying degrees of truthfulness. Lacking today's easy comparison tools, investors back then were more easily fobbed-off with indifferent performance.
Fidelity's greatest contribution, perhaps, has been to be in the vanguard of firms offering active management at costs that represent good value to investors. Active management isn't always the way to go, and over the years, the Fool has argued strongly that passive investments in the form of trackers may be the best bet for many investors.
But passive tracking wouldn't have delivered the sort of returns that Anthony Bolton's Special Situation fund has achieved -- and Fidelity has undoubtedly delivered those returns at a price that represents good value. And that, in short, is the most significant legacy of Fidelity's first thirty years in the UK.
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