While the high-conviction approach of the likes of Anthony Bolton and Sanjeev Shah has benefitted its funds in the past, Lowcock thinks Fidelity’s wealth of contrarian managers has worked against it of late.
"Fidelity hasn’t delivered a particularly strong performance recently, which I think has a lot to do with its emphasis on individual managers," said the adviser.
"In a market environment as difficult as this, where returns are governed as much by politics as anything else, funds with a contrarian manager at the helm can often struggle."
"When the macro outlook is so changeable, having a team focus can be a big advantage. Fidelity claims to have an open-door policy, but I think it’s fair to say the manager’s say is final."
FE Trustnet research shows that a number of funds and investment trusts under the management of Fidelity have struggled to keep up with their competitors since 2006.
Among the highest profile funds is Shah’s Fidelity Special Situations fund, which has returned 3.82 per cent in the last five years, underperforming its FTSE All Share benchmark by 3.07 per cent. It has also underperformed over one- and three-year periods, with more volatility.
Performance of funds vs indices over 5-yrs
| Name |
1-yr returns (%) |
3-yr returns (%) | 5-yr returns (%) |
| Fidelity Special Situations |
-9.9 |
35.7 |
3.8 |
| FTSE All Share |
-1.6 |
49.7 |
6.9 |
| Fidelity Global Special Situations |
-11.9 |
31.5 |
-9 |
| MSCI World index |
-2.7 |
25.5 |
-0.3 |
| Fidelity Europe |
-13.8 |
-2.1 |
-14 |
| MSCI Europe ex UK |
-11.4 |
17.5 |
-6.8 |
| Fidelity Japan |
-9.5 |
10.4 |
-18.9 |
| Topix |
-3.3 |
8.4 |
-7.8 |
| Fidelity Emerging Markets |
-10.5 |
75 |
33.4 |
| MSCI Emerging Markets |
-9.3 |
84.2 |
53.9 |
Source: FE Analytics
Jorma Korhonen’s £1.6bn Fidelity Global Special Situations fund is another that has lagged its benchmark over five years, as well as Fidelity Japan, Fidelity Emerging Markets and Fidelity Europe.
This poor performance has resulted in mass outflows from some of the funds mentioned. In the case of Fidelity Special Situations, assets under management (AUM) have fallen by £468m to £2.6bn so far in 2011, while the £1.6bn Fidelity Global Special Situations fund has shed £291m over the period.
Lowcock did, however, point to the strong performance of Allan Liu’s Fidelity South East Asia fund and the fixed interest range in general.
"The Fidelity funds we rate at the moment are Fidelity Cash, South East Asia, Moneybuilder Income and Extra Income – two of which are bond funds," he said.
Liu’s Fidelity South East Asia fund is a top-quartile performer in its IMA Asia Pacific ex Japan sector over three-, five- and 10-year periods.
Fidelity’s investment trusts have also struggled in recent years. Three of Fidelity’s four closed-ended funds with a sufficient track record have significantly underperformed their benchmark over a five-year period, while Bolton’s Fidelity China Special Situations trust has struggled since its launch in April 2010.
Fidelity Special Values and Fidelity European Values have also underperformed over a three-year period.
Performance of trusts vs indices over 3-yrs
Source: FE Analytics
The one exception is John Lo’s Fidelity Asian Values trust, which is top-quartile over the medium- and long-term. It has returned 77.17 per cent over five years, outperforming its MSCI Asia Pacific ex Japan benchmark by 19.84 per cent.
Ben Waterhouse, who heads up UK retail sales at Fidelity, acknowledges that some of the firm’s highest profile funds have struggled of late. However, he says Fidelity has no plans to change its investment style.
"You are right to point out some underperformance from some of our more recognisable funds, which have gone through a difficult period," he said. "We take this very seriously and our chief investment officer Dominic Rossi has stressed the importance of keeping up our high standard."
"When you are running a portfolio with a contrarian value bias you are always going to go through a period of poor performance. However, such funds usually follow this up with a period of outperformance."
"For this reason, we continue to believe managers should be unconstrained and operate in their own style."
"While Fidelity has no house style, it is important to remember that the managers have a huge analyst resource at their finger tips. In the Asia Pacific, for example, we have the biggest research team in the entire region," he added.
Waterhouse is also keen to point out the strong performance of Fidelity’s fixed interest team.
He commented: "The performance of the equity side has been mixed, with good performance from some of the smaller companies funds and Michael Clark’s two UK equity income funds for example.”
Performance of fund vs sector over 5-yrs
Source: FE Analytics
"However, our fixed interest funds have been strong across the board, particularly from Ian Spreadbury’s Moneybuilder Income and Strategic Bond funds, and the inflation-linked franchise."