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Fidelity: Q2 was our best ever for sales


This year has been a bumpy ride for the UK funds industry, not least due to the uncertainty preceding the EU referendum and subsequent fallout from the Brexit vote.

Indeed, the second quarter of 2016, which is usually one of the strongest for sales, marked two consecutive quarters of net redemptions – the first incidence of such in over 30 years, as investors fled to cash in June.

However, Fidelity is one group that has been bucking the trend. The firm ranked second in terms of gross retail sales in Q2 with inflows of £2.1bn and came fourth on a net basis with sales of £290m, according to the Pridham Report.

This marks what has been a significant turnaround for Fidelity, which only a few quarters ago was caught in a rut of back-to-back net outflows.

Fidelity’s head of wholesale John Clougherty says Fidelity is finally bearing the fruits of its labour – a concentrated effort in reassessing the extensive fund range, engaging with advisers and shaking off the firm’s “secretive” reputation.

“When I joined Fidelity [in 2012] we were seeing consistent net outflows,” Clougherty says. “It was one of the biggest firms in the industry in terms of assets under management, but performance was not as strong as in previous years.

“We talked to the market about what we are good at. The feedback was that we were so big that we talked about everything. We had lost touch with what Fidelity stands for. We decided to start winning people’s hearts and minds by focusing on what we’re really good at.

“We were always known as being secretive about our data, which made it difficult to do business with us, so there was a focus on opening up. We did attribution work on the funds and looked at the portfolio holdings and access to the fund managers.”

The past two years have seen strong net inflows for Fidelity; prior to that the firm had endured four years of net outflows.

“The second quarter of 2016 was the best in history for Fidelity [in terms of sales]. We have built momentum, seen good performance and engaged with brokers and it all came together this year.”


However Clougherty says the firm will not be resting on its laurels.

“Our job now is to keep going, but to stay humble and work harder to win customers’ trust. We should be appreciative of this good run, but these things can change.”

When Clougherty assumed the role of head of wholesale at Fidelity it was a case of being welcomed back into the fold, two decades after first joining the firm. Clougherty began his career at Fidelity in 1992, when he says he was “answering 0800 calls from IFAs”, but soon realised he wanted to work more with brokers and trained to join the sales team. When he left in 1997 Clougherty was head of the wealth channel. Roles at JPMorgan, Merrill Lynch and Skandia Investment Group followed with Clougherty joining Aviva Investors as chief executive of the UK funds business in 2005 before circling back to Fidelity.

The firm’s assets under management total £205.3bn globally while on the UK retail side AUM accounts for £38bn, putting the firm in fifth place according to the Pridham Report’s list of UK retail asset managers.

“On a net basis we are consistently top five for AUM, but we were previously outside the top 40,” Clougherty says.

With M&A activity among asset managers picking up again Clougherty warns some firms will struggle to maintain their brands in the next decade.

“I have a lot of respect for a lot of companies, but the evironment is getting harder for everyone. If you have got the scale we – and one or two others – have got, things look good. That’s if you do things selectively. But an awful lot of fund groups are trying to work out their future in the middle. There is a lot of M&A activity and a lot of names will disappear in the next five to 10 years.

He adds: “We would never rule out acquisitions but if you look at our history we tend to home grow. Integrating companies is a very complicated thing to do.”

Fidelity still boasts a sizeable fund range; there are 40 onshore funds and around double that in offshore funds, although not all of these are open to UK investors. Clougherty recognises that “some are successful, some less so but they are still valuable”.

“We continue to invest in fund managers and analysts,” Clougherty says. “We need to do that if we are going to build solutions rather than just funds. We will maintain high quality fund managers in a broad range of areas.”

Among the most popular funds at the moment are: Ian Spreadbury’s Fidelity MoneyBuilder range; Nick Price’s Emerging Markets fund; Angel Agudo’s American Special Situations fund and Daniel Roberts’ Global Dividend fund.

Clougherty adds that the group’s “rising stars” are also attracting attention, such as Nitin Bajaj, manager of the Fidelity Asian Values trust and the Fidelity Asian Smaller Companies fund and Alberto Chiandetti, manager of the European Opportunities fund.

“Alberto is alpha orientated; the fund has a high level of active money and low benchmark awareness. We are finding there is high demand for this. If people are using passives to keep costs down then they are looking for active funds with punch.” Clougherty adds: “These are not the top-selling funds but they are selling very well and momentum is building.”

Recently Fidelity hired Bill McQuaker, who was previously Henderson Global Investors’ co-head of multi-asset, quite a coup for the company. McQuaker joined the firm last month and Clougherty admits they are “very excited about him”.

The plan is for McQuaker to run money, but Clougherty says they are not in a hurry to decide which portfolio he will manage, with the primary focus being on McQuaker bedding in and getting to know the team.

While Fidelity’s peers may be assessing their future in the post-Brexit era, Clougherty remains sanguine on the firm’s outlook.

“We are one of the least affected groups in the market,” he says. “We have both Oeics and Sicavs; we have had a Dublin office for a long time and we operate in 24 countries. Selling things on the Continent is not a concern for us at all.”

Over the longer term Clougherty’s goal is clear.

“We want to get back to being number one for fund sales. That’s our three-year view.

“More importantly we want to continue the momentum we’ve built and continue working harder. We have listened to people and we will carry on listening. We, and others, are guilty of thinking we know best and pushing things out the door. We have to make sure we’re building products to help businesses – that is the best way our business will grow.”


£2bn gross retail sales in Q2

2012 John Clougherty joined Fidelity as head of wholesale

£205bn global assets under management

24 Number of countries Fidelity operates in


Ben Yearsley, investment director, Wealth Club

The most pertinent question to ask about Fidelity is whether they have regained their pomp of the Bolton years. Arguably after five or more years in the wilderness as a group, the overall picture now looks much better.

They seem to have solved the Special Situations and Global Special Situations problems with Alex Wright and Jeremy Podger.

One big criticism of mine is having too many funds in Asia, both onshore and offshore. Frankly the range is confusing and Fidelity could do well to narrow the range and make it easier for advisers.

Fidelity seems to have turned a corner and has a range of funds in many different markets worth buying again.
Jason Hollands, managing director, Tilney Bestinvest

For many years Fidelity in the UK came to be defined by the towering presence of Anthony Bolton and to some degree it struggled to move on from this.

On reflection allowing Anthony to return to a frontline fund management role to try his hand at Chinese equity investment did not help the process of changing perceptions of the business. However, I think Fidelity has moved forward in recent years and my sense is it is now less dogmatic about the way it views the world and things are done.

Funds we use include Fidelity Emerging Markets, MoneyBuilder Income, Strategic Bond and Global Dividend as well as their index funds.

Justine Fearns, research manager, Chase de Vere

About a decade ago, Fidelity was renowned for its European, American, Managed International and, of course, its gargantuan special situations funds, all delivered by its internally developed investment team.

A tough time with performance and turbulence created by splitting the Special Situations fund, despite an overwhelming vote in favour, dented its popularity somewhat. But tweaks to its approach, notably external hires bringing fresh ideas to complement the strength of home-grown talent, mean it is now as strong as ever.

Its fixed interest offerings have been ever constant thanks to the long tenure of Ian Spreadbury and the strength of the fixed interest team, an understated jewel in Fidelity’s crown.


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