what's the outlook for Fidelity Special Situations?

simondo

Hiya

With the sucessful fund manager leaving this year and the fund being split between UK and global investment, investors are removing their investment from this fund.

Does anyone have any views on the outlook for Fidelity Special Situations fund?

dunstonh

It ceased to be on my recommended list when the charges were increased (thats about Sept 05 ish?).

It hasnt returned and I see no reason why it should. Too many unknowns and Fidelity have been losing a lot of managers recently and their other funds have gone off the boil a bit as well (American & European to name 2 others). Seems like a bit of turmoil in the Fidelity house.

Cannon_Fodder

dunstonh,

This is one of the areas surrounding fund picking that is a difficulty...
(Not the only one, I hasten to add)

So, you "feel" its time to get out, perhaps do so personally, then remove it from your recommended list, so the next several client's reviews see it dropped, and soon you have a self-fufilling prophecy, down the rankings it goes...apparently nothing to do with the choice of trades within the fund, or the sector, or fact that despite a couple of poor (compared to the rest of the sector) years recently, it still comes second over 10 years...

Presumably IFAs talk to each other, rumours get around, but it seems a kind of vague mechanism - or is there some "brotherhood" that mere diy'ers don't know about, where IFAs manage to all drop/take on something at the same time?!?

(...I'm not giving dunstonh all the credit for taking Fidelity down to 170 out of 235 for last year!!)

But who knows, if you'd stuck with it, your own/clients "non-selling" would have maintained its position...which came first the chicken or the egg, if you see what I mean - was the fund's dip spotted OR caused by your exit...??

Was it just charges that put a lot of people off - in which case, aren't we supposed to ignore high charges for the longer term good - i.e. cheap trackers are a false economy...?

Confused.

chesky369

Yes, but surely the point is that you have to think fairly long term and if you think a fund possibly doesn't have a good future, it's your duty to advise your clients to leave it, rather than leave their money in for the fund's possible good. The whole thing about investing is to know when to buy in and when to get out - that's how people make big money.

dunstonh

So, you "feel" its time to get out, perhaps do so personally, then remove it from your recommended list, so the next several client's reviews see it dropped, and soon you have a self-fufilling prophecy, down the rankings it goes...apparently nothing to do with the choice of trades within the fund, or the sector, or fact that despite a couple of poor (compared to the rest of the sector) years recently, it still comes second over 10 years...

I initially stopped it for new contributions. Existing investors didnt pay the increased charges. So, I didnt start moving it out until annual rebalancing time. So, it wasnt a rush move but one done over a period.

Past performance means nothing. Future potential is what matters here and there is going to be an unknown manager.

Presumably IFAs talk to each other, rumours get around, but it seems a kind of vague mechanism - or is there some "brotherhood" that mere diy'ers don't know about, where IFAs manage to all drop/take on something at the same time?!?

The research companies that are used by many IFAs were suggesting it gets dropped from recommendations. The largest network for IFAs research department (covering over 5000 advisers) did recommend advisers dropped it due to uncertainty and other options offering what is thought to be better potential.

(...I'm not giving dunstonh all the credit for taking Fidelity down to 170 out of 235 for last year!!)

Erm, my assets under management arent quite at the level yet

But who knows, if you'd stuck with it, your own/clients "non-selling" would have maintained its position...which came first the chicken or the egg, if you see what I mean - was the fund's dip spotted OR caused by your exit...??

Very much a chicken and egg. You do what you think is best for your client. Sod everyone else.

Was it just charges that put a lot of people off - in which case, aren't we supposed to ignore high charges for the longer term good - i.e. cheap trackers are a false economy...?

Charges have such a small impact that it wasnt those that stopped it alone. It was the unknown future, the generally poor handling of the issue by Fidelity, alternatives appearing to have better potential and charges.

Generally, when you review you look at it on the basis "would I invest in that fund now". With switching costs at nil to 0.25% on average it isnt worth sticking with something you don't believe in.

You dont always get it right. No-one can but you can only go in what you believe to be right.... so far, getting out has been right move with Fid Spec sits.

Cannon_Fodder

Thanks for the detail dunstonh, useful. All we need now is for diy'ers to access that research info...is there a free, near-equivalent "what's hot/what's not" Top Ten on the web somewhere?

dunstonh wrote:

....so far, getting out has been right move with Fid Spec sits.

(Slightly tongue in cheek) - But isn't that using past performance to justify leaving and not going back to them, when past performance isn't suppose to come into it...?

Too good performance could indicate its at the top and overdue a correction, I agree, but presumably too poor performance would keep it off your shortlist, too...? I have trouble understanding that you COMPLETELY ignore performance...doesn't a Fund Manager's reputation come from performance and confidence that he will do it again and again?


More seriously, re the annual rebalancing...do all your clients get re-balanced in the same month, or do they have their own date according to when they invested with you - the reason I ask, if you have a couple of big-ish clients early in the re-balancing calendar, does that risk putting a dip into the out-of-favour fund(s), that hurts the clients at the end of the re-balancing calendar?

Maybe a rush would be even harsher on the fund, but fairer for the clients?

DavidLaGuardia

Cannon_Fodder wrote:

dunstonh,
So, you "feel" its time to get out, perhaps do so personally, then remove it from your recommended list, so the next several client's reviews see it dropped, and soon you have a self-fufilling prophecy, down the rankings it goes...apparently nothing to do with the choice of trades within the fund, or the sector, or fact that despite a couple of poor (compared to the rest of the sector) years recently, it still comes second over 10 years...

Presumably IFAs talk to each other, rumours get around, but it seems a kind of vague mechanism - or is there some "brotherhood" that mere diy'ers don't know about, where IFAs manage to all drop/take on something at the same time?!?

(...I'm not giving dunstonh all the credit for taking Fidelity down to 170 out of 235 for last year!!)

But who knows, if you'd stuck with it, your own/clients "non-selling" would have maintained its position...which came first the chicken or the egg, if you see what I mean - was the fund's dip spotted OR caused by your exit...??
Confused.

I think you are confused here. The supply or lack of IFAs using a fund has little to do with the fund's performance. Ranking is not based on funds size or popularity but on performance within the funds trades.

If a fund is second over ten years, so what? it could have been down to factors or managment in the first five years which are not relevant in the second five. Looking at recent performance is important factor amongst others. Three years is the absolute maximum time to look at how a fund has done.

Cannon_Fodder

I don't deny being confused. But I disagree with your interpretation. Dunstonh says 5000 IFAs got research that indicated to get out, or at least not extend, their exposure to a fund...if only half of the IFAs acted on that with their clients, surely that must create excessive supply of people trying to sell out of the fund, resulting in a dropping price...

Just look at Corporate Bonds, at the moment. The entire sector is in negative - how does that happen to funds which are supposed to be guaranteed loans at set interest rates, in a year of increasing interest rates - shouldn't Bonds be booming? The reason, I interpret, that they are not is because of a lack of popularity because the Stocks and Shares Funds are booming even more, so money has left Bonds to go to Stocks, creating over-supply of Bonds, reducing their price...

In time, when the next crash hits, people will switch from Stocks to Bonds and suddenly, you get Bond funds doing above the 6%(-ish) bond rate, because of popularity...

(I'm no economist, so if someone disagrees, can they keep it in laymans terms? thanks)

1 reason to look back before 3 years ago would be our own crash of 2000...it's not a certainty as to the future, by any means, but when trying to narrow down a shortlist, if a fund rode out the crash, level or even up, rather than dipping during it and suddenly looking good after the fact, is an indicator of solid foundations.

Maybe if your risk profile suits, you may like something nimble and quick to react, but others may wish to have something a bit slower to react in either direction...

simondo

Thanks all who have posted so far. I have found the discussion to be very interesting. I have recently transfered my personal pension to a hl sipp and was thinking about the Fidelity Special Situations as a possible fund. However research I have conducted over the past few weeks has made me think twice and I wanted and few opinions.

Thanks again

Simon

StevieJ

Cannon_Fodder wrote:

I don't deny being confused. But I disagree with your interpretation. Dunstonh says 5000 IFAs got research that indicated to get out, or at least not extend, their exposure to a fund...if only half of the IFAs acted on that with their clients, surely that must create excessive supply of people trying to sell out of the fund, resulting in a dropping price...

Just look at Corporate Bonds, at the moment. The entire sector is in negative - how does that happen to funds which are supposed to be guaranteed loans at set interest rates, in a year of increasing interest rates - shouldn't Bonds be booming? The reason, I interpret, that they are not is because of a lack of popularity because the Stocks and Shares Funds are booming even more, so money has left Bonds to go to Stocks, creating over-supply of Bonds, reducing their price...

In time, when the next crash hits, people will switch from Stocks to Bonds and suddenly, you get Bond funds doing above the 6%(-ish) bond rate, because of popularity...

(I'm no economist, so if someone disagrees, can they keep it in laymans terms? thanks)

1 reason to look back before 3 years ago would be our own crash of 2000...it's not a certainty as to the future, by any means, but when trying to narrow down a shortlist, if a fund rode out the crash, level or even up, rather than dipping during it and suddenly looking good after the fact, is an indicator of solid foundations.

Maybe if your risk profile suits, you may like something nimble and quick to react, but others may wish to have something a bit slower to react in either direction...

I think in times of rising interest rates/inflation bonds do not perform well, funds have locked in at lower interest rates so as interest rates rise bond values fall to adjust the yield to current interest rates. I guess conversely the best time to buy bonds is just before interest rates start to fall.
I think this broadly how it works.

EdInvestor

The UK version (under Bolton's tutelage still) has done quite well in the last few months: I sold the global version some time ago as I'm not interested in that kind of fund.