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This week in Investment

Fidelity’s decision to reduce the higher initial charge it had imposed on the UK portion of its special situations fund has certainly rattled a few investment cages this week.

The group says it imposed a higher initial charge on Anthony Boltons special situations fund in September last year in a bid to slow inflows of new cash into the then 5.4bn fund prior to its split.

Thirteen months on, with the fund split in half at 6bn, Fidelity argues that the higher charge has fulfilled its role and is now lowering the charge on Boltons UK fund down from 5.25 per cent to 3.5 per cent, in line with Jorma Korhonens global special situations fund and the rest of the range.

Some IFAs are not happy that Fidelity should be actively seeking to attract new money to Bolton’s fund when they have still not revealed who his successor will be when he steps down at the end of next year.

Indeed there are some dark whisperings about slipping performance levels from Bolton’s fund, which along with a few other mega funds will not have been helped recently by having heavy weightings in online gambling stocks.

A common refrain among IFAs is that the investment giant is reticent about revealing what its stock holdings are. They argue that with unspectacular short term performance, even a lower initial rate will not incentivise them to buy back into the fund

Others go further and brand the fund house irresponsible for making the fund more attractive to the public just months before Bolton departs.

Fidelity’s brand name is powerful and they argue that individual investors are likely to chase Bolton’s fund regardless of whether they recommend it or not. The UK special sits fund could feasibly be back up to more than 4bn by the time Bolton departs, they say.

Fidelity themselves would be clearly happy to take the money in the last few months of Bolton.

They argue not unreasonably that barring acts of God, they can offer investors 14 more months of unbroken Bolton investment action and as they say, a lot of fund houses might struggle to guarantee who their fund managers will be in a weeks time.

Whatever your view on the new charging level, it just serves as another tasty appetiser to the big question that Fidelity have yet to answer.

The media circus will kick in as the unveiling of the new manager draws near next summer, and we will witness once again how the US investment giant has the ability to polarise opinion in the intermediary market like no other.


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