Since taking on Fidelity Special Situations from legendary investor Anthony Bolton four years ago, Sanjeev Shah has struggled to reproduce the same spectacular returns. Even though Bolton's was not an easy act to follow, the fund has lagged behind the FTSE All-Share over one and three years, and struggled to get out of the bottom quartile of the UK All Companies fund sector.
However as Mr Shah is also a contrarian investor, as was Mr Bolton, it could be argued that it is still too early to expect a strong return, especially as he invests with a long-term horizon. In the year to date, the fund is also doing much better against the FTSE All-Share and has performed among the top 25 per cent of UK All Companies funds.
Mr Shah often goes against the prevailing trend to find significant valuation anomalies. For example, around a quarter of the fund is invested in financials, including bailed-out bank Lloyds, where Mr Shah sees long-term potential but other managers are still avoiding. When seeking stocks he has four key areas of interest:
• Turnarounds or recovery situations that have historically performed poorly but are showing early signs of improvement.
• Growth companies on relatively low valuations because their growth characteristics have not been fully recognised.
• Companies with divisions or businesses where the potential is not fully recognised.
• Companies that have an above-average chance of being taken over in the medium term, but where this is not reflected in the share valuation.
FIDELITY SPECIAL SITUATIONS (GB0003875100) | |||
|---|---|---|---|
| PRICE | 1826p | MEAN RETURN | 8.27% |
| IMA SECTOR | UK All Companies | SHARPE RATIO | 0.43 |
| FUND TYPE | Open-ended investment company | 1 YEAR PERFORMANCE | -5.24% |
| FUND SIZE | £2.21bn | 3 YEAR PERFORMANCE | 29.87% |
| No OF HOLDINGS | 126 | 5 YEAR PERFORMANCE | -3.18% |
| SET UP DATE | 17-Dec-79 | TOTAL EXPENSE RATIO | 1.7% |
| MANAGER START DATE | 02-Jan-08 | YIELD | 0.39% |
| TURNOVER | 95.8%* | MINIMUM INVESTMENT | £1,000 |
Source: Morningstar, *Fidelity.
Performance data as at 18 June 2012.
Top 10 holdings as at 30 April 2012
| HSBC | 7.6 |
| GLAXOSMITHKLINE | 5.9 |
| BP | 5.1 |
| LLOYDS BANKING GROUP | 4.9 |
| LADBROKES | 3.7 |
| VODAFONE GROUP | 3.3 |
| WOLSELEY | 3.1 |
| CENTRICA | 3.1 |
| ITV | 3 |
| PEARSON | 2.9 |
Sector breakdown as at 30 April 2012
| Consumer services | 27.1 |
| Financials | 25.6 |
| Industrials | 10.3 |
| Oil & gas | 8.8 |
| Healthcare | 7 |
| Telecommunications | 6.5 |
| Technology | 4.6 |
| Consumer goods | 3.9 |
| Other | 5.1 |
| Cash | 1.10 |
