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Bolton Wanderers

Fidelity has given investors and advisers returning from their summer holidays a lot to think about by announcing it is to split Anthony Bolton’s giant special situations fund next year.

Advisers’ reactions have ranged from stoic to outraged and some are already recommending a switch. Could Fidelity have handled things better?

Hargreaves Lansdown seized the opportunity to take an ad in a national newspaper saying: “Fund is being split. What does it mean? Is Bolton retiring? Should you buy? Should you hold? Should you sell? Who could run the fund?”. The ad offers a free report.

The company’s stance is for existing investors to stay put until uncertainties over the switch are cleared up. The report outlines what is happening and gives clients their options. Senior analyst Meera Patel says the report aims to stop investors worrying.

She says: “Don’t forget there are 250,000 investors in this fund. We have been getting calls from concerned clients and we are trying to help them. We are not making any money out of the report.

“I know it is boring telling people to stay put but we are trying to make sensible decisions on behalf of our clients.”

Alan Steel Asset Management chairman Alan Steel sees no point in worrying too much about the split as Bolton’s retirement has been on the cards for some time.

He feels that Fidelity had to manage the situation somehow and investors should wait to see what transpires as Bolton will still be running all the money until the end of 2006 but Steel is concerned that some IFAs will try to capitalise on the situation.

He says: “My main concern would be that more unscrupulous IFAs will use investor panic as an opportunity to churn money and make themselves a profit out of the publicity.”

Dennehy Weller managing director Brian Dennehy has had calls from several concerned investors, with one saying “she was not going to wait until special situations falls on its behind before getting out”.

Dennehy says investors should be wary of IFAs trying to get remuneration from switching clients’ money but he is telling his clients to “kiss goodbye” to special situations although he does not take initial commission on switches.

He says: “We have thought carefully about this but cannot see why we should sit on the fence for two weeks. Perhaps people cannot believe their instincts – to get out of the fund. There are some excellent alternatives and arguably this is a good time in the stockmarket cycle to make such a move.”

Dennehy’s concern is the ambiguity over the switch. Having discussed his position with Fidelity, he says they kept reminding him that Bolton will be running the fund for two-and-a-half years and that the details of the switch will become clear before the vote in 2006.

Dennehy says: “But investors will only know the new mandate and which part Bolton is to run when it comes to voting, they still will not know who the other manager is going to be. This creates uncertainty and clients do not want uncertainty. Fidelity should have kept it simple but it has confused everyone.”

Chelsea Finan-cial Services managing dir-ector Darius McDermott is outspoken about what he believes is the “outrageous” way that Fidelity has managed the process.

He says he would have liked investors to have been given more notice on the soft closing of the fund through a rise in the initial charge and has taken the fund off his buy list although it seems that this is exactly what Fidelity wanted.

Fidelity head of IFA channel Peter Hicks says: “Darius disagrees on the notice for soft closure but we took this step because we wanted to avoid a fire sale, with everyone rushing into the fund. It has grown by 1bn in the last year and our first responsibility was to existing investors. We have had to think beyond the obvious because this is such a big fund.”

McDermott is not sure whether he would buy the fund after the split, although he does like current take- over tips Tim McCarron and Sanjeev Shah with McCarron on his buy list. But McDermott remains frustrated by the lack of information being given.

McDermott says: “It is very difficult to say whether we would look at the fund after the split because Fidelity have given us so little information on what might happen to it.”

Fidelity seems keen to talk to advisers about the news, with Hicks saying he has been talking to advisers non-stop since the announcement.

Head of communications Richard Miles says the company is keen to enter into a dialogue with advisers, with Bolton likely to heed messages from the market as to what to do with the new fund mandate.

Asked whether Bolton is likely to spend more time at his holiday home in Antigua after he stops managing the money at the end of 2007, Miles says: “Bolton lives and breathes Fidelity. He will be actively mentoring the new managers and will still have input at the weekly investment meetings.”


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