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Finn de siecle for Fidelity as firms cash in on ideas

The biggest investment firm’s biggest fund run by the industry’s biggest name manager dominated the headlines for much of the year.

The unprecedented splitting of the £6.5bn Fidelity special situations fund in September ended the speculation that had been building over summer following the timetable for change was announced in June.

Everyone knew that Anthony Bolton would retire at the end of 2007 but the news that one half of the fund would be a global special sits fund took many by surprise. Not as many as the replacement manager did though – Jorma Korhonen.

The little known Finn had spent 10 years at the group but only the last four as a fund manager. Despite some reservations, most IFAs seemed reassured by the fact that Bolton had handpicked his man.

The year was also notable for the growth of focused or best ideas funds. The overwhelming success of Skandia’s global best ideas fund launch in June preceded a spate of similar funds, with Rensburg launching a UK version in September, quickly followed by Skandia itself with a UK version of its best ideas fund in October.

Skandia’s global best ideas took £127m in its first five months but in what must have been one of the equity fund launches of recent years, UK best ideas took more than £203m in a single month.

Gartmore’s eventual management buyout in late May ended a long running saga with a number of prominent suitors falling by the wayside before private equity firm Hellman and Friedman helped the firm to complete a £500m MBO as majority shareholder.

Gartmore then managed to tie most of their senior fund managers to equity deals with the highest profile departure being Philip Ehrmann who defected to Jupiter to run a new China fund, leaving Chris Palmer to run the merged Latin American and Asian equity desks.

After a tug of love with Resolution, European fund manager Tim Callaghan eventually opted to stay at Gartmore after chief executive Jeff Meyer made him a third improved offer he could not refuse.

Jupiter revealed it was considering a possible flotation, with a decision likely by the middle of next year, while Credit Suisse endured a difficult year after the departures of long-standing and popular managing director Ian Chimes and sales director Mark Thomas.

The firm also came in for some criticism on its income funds, with Errol Francis’s sudden departure causing investment guru Bill Mott to postpone his retirement.

HSBC announced it would move its own income funds to multi-manager, precipitating the departures of Chris Rodgers and Bob Morris after a period of relative underperformance.

The year was notable for the number of star managers who had a tricky year in performance terms. The sharp market correction of May and June caught out a number of more active fund managers while the more solid defensively minded funds tended to have a better year.

The specialist sector was the most popular retail inv-estment area throughout the year, with property blazing ahead as the choice for investors, despite growing concern in some quarters that commercial property yields are low. But investor appetite seems unswayed by the news.


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