AJ Bell dropped the £3.2bn Fidelity Global Special Situations fund from its Favourite Funds list at the end of March.
This followed veteran manager Jeremy Podger’s retirement, originally announced in September 2023, as well as the departure of Jamie Harvey, the fund’s co-manager, in May 2023.
With these exits, the fund has lost “significant experience”, according to Ryan Hughes, interim managing director at AJ Bell Investments.
Fidelity International hired Christine Baalham and Tom Record from Ninety One and Liontrust Asset Management, respectively, to replace Podger and Harvey.
“A new team was needed and that made us uncomfortable,” Hughes said. “Fidelity is usually strong at succession planning using their analyst base, so this process has not been as well managed as it could have been.”
Baalham and Record have never worked together at Fidelity or elsewhere and therefore will take some time to properly bed in and to establish a working relationship with Fidelity’s analysts, who are core to the investment process, Hughes said.
“Given these points, and that we have a number of alternative global options on the Favourite Funds list, we felt it was appropriate to remove the fund,” he concluded.
Launched in 2006, the fund’s aim is to outperform the broader market by 4% per annum over rolling three-year periods. To achieve that, it takes an unconstrained investment approach centred around Fidelity’s team of global analysts, which act as the starting point for idea generation.
The process has proved successful and at the beginning of March 2024, the fund featured among the most popular funds held by AJ Bell’s ISA millionaires.
In the past three years, the fund has performed in line with the rest of its peer group, but lagged the MSCI All Country World index by 10 percentage points, as the chart below illustrates.
Performance of fund against sector and index over 3yrs
Source: FE Analytics
For this reason, it was included in Bestinvest’s Spot the Dog report, which names and shames the funds that have underperformed a relevant benchmark by more than 5% for the past three years, as well as in each of the three years individually.
Beyond AJ Bell, Rayner Spencer Mills Research (RSMR) analysts have also placed Fidelity Global Special Situations ‘under review’ due to the manager changes.
In the IA Global sector, the other Fidelity strategy highlighted by AJ Bell is the passive Fidelity Index World fund.