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Can the stars teach others their talent?

The recent announcement that Anthony Bolton is reducing his fund management commitments by stepping down from running Fidelity&#39s European fund was surprisingly welcomed in some quarters.

Welcomed not for the fact that one of the industry&#39s most experienced and respected fund managers appears to be taking the first steps towards winding down his active fund management duties ahead of potentially retiring but for the fact that Bolton plans to offer his services in a mentoring capacity.

For Fidelity, it can only be a bonus to have an individual of Bolton&#39s experience and ability on the scene to provide guidance and insight to the up and comers within the investment house.

Catalan Asset Management director David Goss says: “The idea of succession is an important one. Perhaps if we had more investment houses paying attention maybe we would not have as much turbulence in the market.”

Bolton has made it clear he plans to spend the majority of his time concentrating on running his UK funds but is looking forward to the new mentoring role he is taking on. He has committed himself to running the special situations fund and the special values investment trust for at least another three years, when he will be 55.

He told Money Marketing: “Consistently, the feedback I get from the team is they want to have more of my time. Running the three large funds I have takes all the time in the world. I look forward to making time in my day to talk to the younger analysts and fund managers. The key thing I want to do over the next few years is to pass on to the next generation some of my experience.”

“A lot of the younger managers who have done well have not seen all market conditions. You have got to be aware of that before you can be truly experienced – and that takes at least 10 years.”

Hargreaves Lansdown head of research Mark Dampier says: “Fidelity are probably the most professional house in the industry, generally speaking they do not lose very many fund managers. Realising they have a fund manager of Bolton&#39s experience there, they are winding him down so it will not affect the fund too much. You can afford to have a young team if you have two or three members of the old guard standing in the background for advice.”

Fidelity is not alone either in its team approach or having senior people to provide assistance to younger managers. Another company which does well in this area is Credit Suisse Management, where Bill Mott, the highly valued manager of its income fund, occupies much the same role as Bolton. CSAM managing director Ian Chimes says: ” You want a variety of people. You want some young guns and some grey hair. It certainly makes great sense for the older guys to pass on their experience.”

Other fund houses could do well to follow Fidelity&#39s lead.

When ABN Amro was hit in April with the dual defection of star managers George Luckraft and Nigel Thomas to rival Framlington, many were predicting ABN&#39s demise in the UK market.

It has sorted out its problems with the purchase of boutique investment house Artemis but advisers say if it had a more structured approach with experienced managers grooming the next generation it would not have needed to take such a drastic step.

In the US it is much more common for managers to remain active later into their careers than it is in the UK.

There are fears that too many of the star fund managers in the UK have come to the fore on the back of the longest bull market in recent memory, having never had to deal with the type of adversity that is currently hitting the market.

Bates Investment fund research analyst James Calder says: “There are not too many elder statesmen in the UK market today. Most of the younger guys may not have seen a bear market of this depth so to have someone there guiding the tiller can only be a good thing. In the US, there are more managers who are still managing funds in their 40s and 50s, compared with the UK where most tend to retire or move on much earlier.”

However some IFAs are sceptical about the moves at Fidelity. Chartwell Investment Management director Patrick Connolly says: “I think Fidelity has tried to dress it up as best they can. It depends on how much mentoring he will actually do. In terms of what sort of impact it will have going forward we think not very much because he will be slowing down and not wanting to take on any more time-consuming responsibilities at Fidelity.”

Baronworth director Colin Jackson has further reservations, saying: “I think that someone like Bolton has an in-built talent but I do not think someone like him can always pass on that talent. You can give advice or guidance but it will be interesting to see if he is successful in passing on his talent.”


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