Bolton says buy while Woodford is more cautious. But they both are in agreement on one crucial matter.
Anthony Bolton is being described by papers and websites as bullish on investing. Indeed, he has been reported (by The Times and Citywire, for example) as saying: 'We are in the first stage of a bull market that should last a couple of years and, therefore, it is still not too late to invest.'
Wonderful. There's nothing like a fund manager with such an outstanding long-term record boosting investors' morale.
Now what would you do if another manager with a great record said the opposite? Neil Woodford was reported as saying: 'I see no reason for confidence and do not anticipate meaningful recovery in the next three to four years.'
I've got a headache.
Yet both are telling us to invest
Looking more deeply at what they're saying, in my view, both their positions mean that now is a great time to invest. Neither of them are talking about another major slump. At worst it seems we're not going to have a 'meaningful recovery' soon, but it may be we have quite a way to go before the end of the current bull run.
If you have a lump sum to invest, it might be a good idea to invest in a combination of what the two managers are advocating, but perhaps with more emphasis on what Bolton considers may lead any bull run over the next few years.
A two-pronged tactic
Now will also be an excellent time to drip-feed money into the stock market, if we extrapolate on Woodford's thoughts. If he's right, and there's no meaningful recovery, this means that prices could languish under a bearish cloud for years.
The nub is that we have more time to buy more shares more cheaply before the recovery takes off meaningfully. In the meantime, many of Woodford's favoured sectors could give you a reasonable dividend return, which should beat savings accounts.
The financial sector
Bolton says he has seen six banking crises in his career and this is the worst, but at the end of each it is bank shares that have outperformed. The two years coming out of a financial crisis, he says, is the best time to own bank shares. He says regulation is a risk, but that most companies adapt and evolve to cope. In my view, banks are fantastic at stepping around or short-circuiting regulation, so I'm with him on this.
After running Fidelity's Special Situations for a long time, Bolton now has just a supervisory role. Yet this fund has a massive holding in financial stocks, 30% in fact. It's largest financial holdings are HSBC (LSE: HSBA), Royal Bank of Scotland (LSE: RBS) and Lloyds Banking Group (LSE: LLOY).
Woodford says that the 'banking system remains in a protracted period of rehabilitation'. This is certainly the case, but that could well mean that during these times we'll be able to get some real bargains, even after the gains since March. If he's right then perhaps it will take longer for banking shares to boom again then Bolton believes, but investors sometimes require patience before they're rewarded.
Defensive sectors
Woodford is keen on defensive sectors and believes they will perform very well, despite his view of the economy. He's recommending tobacco, pharmaceuticals, utility and telecom sectors. They have sound fundamentals, but their prices have trailed the market, he says. It seems that Woodford's view is more long term than Bolton's, as he is looking to buy into 'high-quality businesses at valuations that are rarely available.'
Fidelity's Special Situations fund also has large holdings in GlaxoSmithKline (LSE: GSK), AstraZeneca (LSE: AZN) and Vodafone (LSE: VOD), which shows yet another overlap with Woodford.
Technology stocks and emerging markets
Bolton is also keen on technology stocks, probably because they've not been part of any massive bull run in the past few years.
Woodford is silent on technology stocks and his main fund is very underweight in them, although this could largely be because there are far better income prospects in defensive sectors.
With the exception of emerging markets dependent on commodities, Bolton is bullish on Asia and continues to see a good long-term picture for China. I've not read what Woodford thinks about foreign stocks recently, but his funds primarily invest in the UK market.
Time to think positively
As Bolton said: 'Earlier this year investors were about as negative as I've seen them in my 38 years in the business. As markets have rallied strongly from their March lows, sentiment has started to improve but investors are not yet too optimistic.'
Time and again, history has shown that it's after such lows in confidence and after such poor returns over many years that prolonged periods of great returns follow.
Regardless of whether this happens over the next two years, as Bolton thinks, or whether it's a few years off, as Woodford thinks, now seems a good time to invest.
More from Neil Faulkner:
Neil Faulkner owns shares in GlaxoSmithKline.
