And among this small group of elite managers, only Anthony Bolton (pictured) has never failed to make the headlines – even though he never courted the publicity. Indeed, even when a news story is not about him, journalists often find a tenuous link so his name can lead the story and double the amount of reads.
Having run money for a year or two at Schlesinger Investment Management, Anthony joined Fidelity on 17 December 1979, the day the company launched its first four unit trusts for British investors. He ran the Fidelity Special Situations fund from that time until 2008 when he retired (the first time) from fund management.
During those 28 years, he turned £1,000 into £147,000, with 19 per cent per annum returns. On a total return basis, the fund returned a massive 14,124 per cent, according to data from FE Analytics.
Performance of fund 1979-2008
Source: FE Analytics
When the fund first launched it wasn’t an easy sell – Anthony was unknown, a 29-year-old Cambridge engineering graduate without much experience, and the name "Special Situations" meant little to investors. It was so difficult to sell that apparently the sales team were even offered double commission at one point to try to get more assets.
Over the subsequent years, he developed his own patent contrarian style with a bias to medium and smaller companies, which were less well covered by analysts. He learned from both his mistakes and successes.
And he did make mistakes. In the 1980s he missed investing in Ericsson early, as he was put off by an old-fashioned phone on the receptionist’s desk when he went to meet management. In the 1990s, when the fund was struggling in the UK recession, he invested in Polly Peck and Parkfield – and we know what happened to them.
His contrarian approach also led to some very uncomfortable periods, such as when he refused to invest in internet stocks at the end of the 20th Century. In hindsight, he made exactly the right call and investors were well rewarded when the dotcom bubble burst, but it made for a rough couple of years when the fund underperformed its peers.
Performance of fund vs sector and index 1994 to 2005
Source: FE Analytics
However, his strike rate of successes to failures in stockpicking has consistently been around the 70 per cent mark and better than virtually all his contemporaries. Those who stayed patient and stuck with him were amply rewarded.
Very few managers stay in the same job, managing the same fund, for anywhere near as long. The resources at Fidelity and, importantly, the freedom he was given to run money, had a big part to play in this longevity.
The basis of his success I think lies in a variety of traits he exhibited: namely hard work, a passion for detail, being a good listener, self-discipline, pragmatism, patience and an innate calmness.
I also admire him for not letting success go to his head. He always had an open-door policy in the Fidelity offices and would work with and be respectful to employees at all levels of the organisation. He also cared about the people who invested in his fund and wanted to do well for them.
He kept a box of letters investors had written to him over the years, many of which were complimentary, thanking him for the good performance and telling him how they were spending their investments on their families. But top of the pile were some complaints from investors, ticked off with a period of underperformance or an investment in a bad stock. He kept them to remind him for whom he was investing.
Another reason I believe Anthony is one of the great investors is that very few managers can run money consistently successfully in two different regions at once. But Anthony ran the UK and European funds simultaneously for more than a decade. He ran the Fidelity European fund from 1985 to 2002 and the Fidelity European Values trust from 1991 to 2001, and successfully beat the MSCI Europe ex UK index in both cases.
Performance of fund vs index 1985 to 2002
Source: FE Analytics
His investors were naturally disappointed when, in 2006, he decided to stop managing money. But he retired with an impeccable record and a reputation among both private investors and his peers that was second to none in the UK.
As he wound down from fund management, Anthony wrote a book called Investing Against the Tide. In the introduction, he voiced his sadness at the thought that he would no longer be running money and wrote that he couldn’t quite believe he would never again read a company’s preliminary statement, examine a balance sheet or discuss ideas with an analyst.
So perhaps even then he was considering another fund management challenge. Two years later, it was revealed Anthony Bolton was coming out of retirement to run a Chinese equity investment trust. Cue a massive PR and marketing campaign and one of the biggest investment trust launches in history, with £460m of subscriptions almost instantly.
There were many question marks over the trust and the decision for Anthony to return to fund management: had he been pressured to return to help stem the massive outflows Fidelity was experiencing at the time? For how long would he run it? Could he really replicate his previous success in a market where he had very little experience? Why were there performance fees and commission?
What it really came down to was simply that the Chinese market excited him and, having spent some time in the region, he’d got back his old spark and enthusiasm for running money and thought that the opportunities were too good to resist.
The trust started off well, outperforming in the first 12 months and trading at a decent premium. It wasn’t until later that returns started to suffer, when Chinese small and mid caps were hurt as growth slowed. This, coupled with a few dud stocks, meant that a period of underperformance began and continued until he announced he would retire once again, in 2014.
Performance of trust vs index since launch
Source: FE Analytics
The mistake in my mind was not that China was the wrong asset class – over the long-term, I think it will do very well. I think the mistake was Anthony coming back for such a short period of time. While the fund did well in the first 12 months, 2011 was a terrible year for smaller companies and his style went right out of favour. Had he been managing the money for a decent length of time, this part of the story would no doubt have been a very different one.
While Anthony’s reputation has taken a knock and it’s a disappointment it didn’t turn out better, I’m still of the opinion that he is one of the greatest investors we have had in the UK. Both professional and private investors have learned, and can still learn, a great deal from his wise words.
I’m one of them.
Darius McDermott is the managing director of Chelsea Financial Services and an FE AFI member.
This article was first published in FE Trustnet Investazine – our new digital magazine. To download the latest edition, please click here.
