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Best UK all companies funds

ANDREW COWAN, director, Aitchison & Colegrave

Sometimes the performance of a fund is so consistently good, we have to conclude that the fund manager must be a rare talent. Fidelity special situations is such a fund and Anthony Bolton is such a fund manager. Leaving aside for a moment the Financial Services Authority&#39s doubts about past performance being a reliable indicator of a fund&#39s worth, let&#39s just say that if this fund were a horse, the punters would be rushing to place bets.

Despite its apparently unwieldy size, now £1,604m, the fund has provided excellent returns over long periods. According to Standard & Poor&#39s, the fund showed a positive return of 3.8 per cent in the year to January 1, 2002 and the compound average return over the last 10 years is 18.8 per cent a year.

This is outstanding performance when compared to the average performance of the UK all companies sector, which has fallen over the last 12 months almost in line with the FTSE all share and has only managed 10.2 per cent a year over 10 years.

Anthony Bolton is a stock picker who is often willing to go against the trend. The objective is clear, long-term capital growth by investing in an actively managed portfolio of mainly UK equities biased towards medium and smaller sized companies.

So what of the lucky investor who has been with the fund since its launch in 1979 and benefited from a total return of 6,585.3 per cent according to the Fidelity Investment funds factsheet (December 2001). Tell him that past performance doesn&#39t say much. Yeah, right.

Jonathan Webster-Smith, research analyst, Brooks Macdonald Gayer Asset Management

Recent market volatility, accounting misdemeanours and a sobering microeconomic picture, have shrouded markets with a distinct lack of clarity, making future market direction hard to predict. The Gartmore UK focus fund should be able to exploit the great divergence that now exists between the best and worst performing stock of all major indices.

The fund is a concentrated growth portfolio aiming to exploit current market pricing anomalies. Already it has generated positive returns in excess of 16 per cent, since inception in January 2001. This compares to the 15 per cent decline in the UK all companies sector and a fall in the FTSE 100 of around 18 per cent over the same period.

Stock picking, profit taking and tactical positioning are the three buzz words of this fund. It is selected largely from a strategic and tactical perspective, with turnover at around 850 per cent since launch and strict buy and sell disciplines in place. The expertise of the fund manager Ashley Willing and Gartmore itself makes UK focus an ideal satellite fund within a portfolio containing core income and growth holdings.

The aggressive investment approach makes the fund ideal for investors willing to accept greater volatility. The UK focus team is confident of success and operates a performance related fee dependent on the fund remaining top quartile.

This incentive structure and the nimble nature of such a concentrated, flexible, small fund mean that it is superbly positioned to outperform markets as they recover throughout 2002 and beyond.

NICK CONYERS, director, Pearson Jones

There are a number of excellent funds to choose from within the UK all companies sector and these can be matched to individual clients&#39 requirements. As my favourite, I would select the ABN Amro UK select opportunities fund.

Interestingly, the fund is only now approaching its first anniversary. But it will be recalled that Nigel Thomas was responsible for the excellent performance record of the Solus UK special situations fund and the fund was given the coveted AAA status at outset.

While the prospects appear favourable for UK equities during 2002, the added value to clients is most likely to come from a stock-picking research-driven approach to investment and this is Nigel Thomas&#39 speciality. The fund is firmly in the value-driven camp at present, specialising in mid-cap companies. The charging structure is a conventional 5 per cent initial charge, with 1.5 per cent annual management charge. However, as with most fund management companies, initial charges can be negotiated downwards where good working relationships exist.

It is always difficult for a manager with Thomas&#39 reputation to keep delivering added value, but his track record deserves support and investors are likely to be rewarded in the future.

NICOLA OWEN, director, Carringtons

The Fidelity special situations fund has managed to be an exception to the rule during the recent times of negative performance in the UK sector. While the average UK fund has fallen by 17 per cent over the two years to December 1, 2001, according to Standard & Poor&#39s, Fidelity special situations has managed to achieve a remarkable rise of 25 per cent. It has been the one shining star where general performance has been lacklustre.

All credit should be given to fund manager Anthony Bolton who, apart from about four years ago when there was a slight blip in the performance, has managed to sustain a growth rate that puts the fund in the top 10 over one, two, three, five and 10 years. Anyone investing £1,000 in the fund 10 years ago would find that their investment would now be worth over £5,000.

Bolton has been with Fidelity since 1979 and is regarded as one of the industry&#39s leading fund managers. This consistency in performance and the longevity of the fund manager are the two main factors that make this fund one of my favourites.

The fund itself is more aggressive than most UK funds and invests primarily in companies that are small to medium sized. Having said that, the fund has been positioned on a defensive basis for some time. This is beginning to change and new investment opportunities are being investigated.

The size of the fund has risen rapidly over the last few years and although this can be a concern, performance has not been affected. The charges levied by the fund are average and it is true that others are less expensive. However, you have to go a long way to beat the performance. I predict a bright future.


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