In the last year, there has been a mass exodus from the likes of Fidelity Special Situations, Jupiter Income, Jupiter Financial Opportunities and BlackRock UK Dynamic. The funds are among the 11 with the highest outflows in the entire unit trust and OEIC universe over 12 months.
While all four of these industry giants have a stellar long-term record, they have all underperformed their benchmark over a three-year period.
Sanjeev Shah’s Fidelity Special Situations fund has experienced the biggest outflows of the four vehicles. According to FE Analytics data, it has shed £418m in the last 12 months, excluding the impact of performance. These outflows accounted for 14 per cent of the fund’s assets under management (AUM) in October 2010.
In the last three years, Shah has underperformed his FTSE All Share benchmark by 19.04 per cent. The fund has also marginally underperformed over five years.
Performance of fund vs index over 20-yrs
| Name |
3-yr returns (%) |
5-yr returns (%) |
10-yr returns (%) |
20-yr returns (%) |
| Fidelity Special Situations |
35.13 |
6.27 |
137.54 |
1079.59 |
| FTSE All Share |
54.17 | 6.94 | 59.36 |
346.88 |
Source: FE Analytics
Over 10- and 20-year periods however, Fidelity Special Situations is one of the best-performing funds in its IMA UK All Companies sector.
Shah replaced industry legend Anthony Bolton as manager of the fund at the beginning of 2008.
As a percentage of AUM, the Jupiter Financial Opportunities fund has experienced the biggest outflows. According to FE Analytics data, the fund had more than £1bn AUM in October 2010; now, it has little more than £600m.
Although performance has played a part, outflows of £341.55m were the biggest reason behind this decrease.
Under the management of Philip Gibbs, the fund consistently and substantially outperformed its FTSE Financials benchmark in the 2000s, but in recent years it has struggled. According to our data, the fund has lost 1.35 per cent in the last three years, underperforming its benchmark by 15 per cent.
Guy de Blonay took over as lead manager of the fund at the beginning of 2011.
A spokesperson for Jupiter said: "It is inevitable that some clients have chosen to reallocate their assets away from the sector, given the stresses in the global financial system since 2008."
Anthony Nutt’s Jupiter Income fund and Mark Lyttleton’s BlackRock Dynamic fund have also endured outflows exceeding £400m in the last year. According to FE Analytics data, both have underperformed their sector average and the FTSE All Share index over three- and five-year periods.
Performance of funds vs sector and index over 5-yrs
Source: FE Analytics
The funds have both outperformed their sector average and the FTSE All Share over a 10-year period.
Adrian Lowcock, senior adviser at Bestinvest and author of Spot the Dog, says he isn’t surprised by the mass outflows from these industry giants.
"Jupiter Income has been struggling for several years now," he said. "Initially, investors stuck by the manager after a brief period of underperformance, but it seems they are now running out of patience."
"It’s a fund that featured in our Spot the Dog study in 2009 and 2010 for that very reason," he added.
Mark Lyttleton’s BlackRock UK Dynamic fund featured in Bestinvest’s study this year, and the manager fell out of the FE Alpha Manager list.
Lowcock says outflows from Jupiter Financial Opportunities are more about weaknesses in the sector rather than poor performance.
"Philip Gibbs is a very good manager, and protected against the downside very effectively in 2008," he explained. "Guy de Blonay is also a very good manager in his own right."
"However, the long-term outlook for the financials sector is not as good as it was. There is a lot of distrust after the financial crisis, and regulatory changes could also present a problem."
While he thinks Sanjeev Shah still has a lot to prove, Lowcock says the outflows from Fidelity Special Situations shouldn’t be attributed to the new manager.
He commented: "Performance over the past year has been pretty weak, partly because Shah took a bet on banks which hasn’t paid off yet."
"However, I doubt this is the main reason it has lost money. The fund has a lot of legacy investment, so there’s always going to be a natural outflow to overseas areas, which now make up a bigger proportion [of the world index.]"
In a recent interview with FE Trustnet, Lowcock highlighted Jupiter Income as a fund well past its sell-by-date.
BlackRock UK Absolute Alpha was also among those with the highest outflows in the last year.
Mark Lyttleton’s absolute return vehicle has returned 5.04 per cent over three years – less than half as much as its sector average.
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