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Fidelity splits its special sits

Fidelity’s decision to split Anthony Bolton’s giant special situations fund into two funds with a UK and wider European remit has raised concerns from advisers.

Star manager Bolton will eventually manage only one of the funds and Chelsea Financial Services managing director Darius McDermott says that he expects money to flow from the non-Bolton fund unless it is taken on by a manager with proven abil- ity to run over 3bn.

He says this makes Tim McCarron, who runs Fidelity’s 3.6bn European fund, the most likely contender for the new fund, with John Stavis and Sanjeev Shah also in the running for the job.

Fidelity plans to divide the fund in 2006. Bolton will run both sets of assets until the end of 2006 when he will hand over one set to another manager and run the remainder before stepping down at the end of 2007.

The new fund is likely to invest more in continental Europe than the current 80 per cent UK minimum.

Bates Investment Services stopped recommending the fund to new investors this year over fears that the new investment mandate could be too different from Bolton’s style but it is advising existing investors to wait and see who the replacement managers will be.

Bolton has run the UK’s top-performing retail fund since 1979 but questions have been raised over his successor and the size of the fund. He says the split is designed to prevent it getting too big.

Fidelity is also discouraging new investment by raising initial charges from 3.5 to 5.25 per cent and is yet to announce the levels of charges after the split. Changes will be subject to a shareholder vote.

Bolton says: “I am likely to be giving up at some stage so at least people now know how long they have got me. People will be asking what is one year of Anthony Bolton worth. It is up to them to make their minds up. Passing on the whole fund to one manager is a pretty big mantle and it is better to have two people running the fund than one.”

Hargreaves Lansdown head of research Mark Dampier says: “Why does Anthony Bolton think this is clever? Investors were faced with one question – if he goes, do I stay? Now they have more decisions to make and we still do not know who the successor is. The move is a bit strange and it has increased speculation rather than reduced it.”


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