Shah quits as manager of Fidelity Special Values
IFAs have welcomed the move and say it will allow Shah to concentrate on his underperforming Special Situations fund.
FE Alpha Manager Alex Wright
has replaced Sanjeev Shah as manager of the Fidelity Special Values investment trust.
Shah relinquished the responsibility to focus more fully on his Fidelity Special Situations
fund, which has endured a torrid time in the last three years, underperforming its FTSE All Share benchmark by almost 18 per cent.
"We respect the wishes of Sanjeev Shah
to focus exclusively on his open-ended fund and the board would like to thank him for his diligent management of the portfolio in what has been a particularly challenging period in equity markets," said Lynn Ruddick, chairman of Fidelity Special Values
While it has been made clear that the decision was taken by Shah himself, Fidelity also highlighted its intention to make the trust more small cap-focused, an area that Wright excels in.
According to FE data, his FE five crown-rated Fidelity UK Smaller Companies portfolio is the fourth-best performing fund in the entire unit trust and OEIC universe over three years, with returns of 105.8 per cent.
"The board is keen to take greater advantage of opportunities for capital growth available from dynamic smaller and mid cap companies and this is an area where Alex has demonstrated considerable success. However, the investment strategy and the company’s benchmark remain unchanged," added Ruddick.
Sections of the IFA community have criticised Shah for his poor performance since taking over Fidelity Special Situations and Fidelity Special Values in January 2008 from the hugely successful Anthony Bolton.
In the 10 years prior to Shah’s appointment, the fund and trust returned 289 and 338 per cent respectively, compared with 82 per cent from their FTSE All Share benchmark.
However, both have struggled in the last three years or so.
Performance of fund, trust and index since January 2008
Source: FE Analytics
Leading IFAs believe that Wright’s appointment will not affect Shah’s position at the company.
Darius McDermott, head of research at Chelsea Financial Services, said: "Shah has had an up and down time at Special Values and it is good that he can now concentrate fully on Fidelity Special Situations."
"Wright is a good choice and his track record of investing in smaller and mid cap stock is encouraging for investors."
Adrian Lowcock, adviser at Bestinvest, added: "It is an interesting change and it is clear Shah has struggled."
"We downgraded Fidelity Special Situations and Fidelity Special Values to a one-star investment in May 2012, which is clearly quite a strong rate change."
Lowcock highlighted the difficulties Shah’s contrarian style faced during his leadership of the trust, implying that his strategy could come good when the macro environment changes.
In addition, IFAs are sceptical that Shah’s decision to leave Fidelity Special Values will lead to him stepping down from Fidelity Special Situations.
McDermott believes it is "extremely unlikely" that Shah will leave the fund, while Hargreaves Lansdown's Richard Troue says anyone who holds Fidelity Special Sits should be encouraged by the manager's departure from
Fidelity Special Values.
Troue said: "We believe it is a positive move for investors in Fidelity Special Situations as he will now just be concentrating on one portfolio."
"It is a big, big fund and Fidelity will do everything to keep performance up."
Lowcock added: "The move from Fidelity is a good one as it shows they are trying to address the situation and attempting to help Shah out."