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Managing The UK's Largest Retail Fund
We delve into the investment career of Anthony Bolton, who ran the Fidelity Special Situations Fund for almost three decades.
After featuring several famous investors from abroad over the past few weeks, we head back to the UK. This week, we wanted to focus on Anthony Bolton, a name that might not carry the gravitas of more well-known counterparts but an incredibly shrewd stock picker who deserves more light shone on his talent.
Who is he?
Born on March 17, 1950, Bolton grew up in Surrey, England, and displayed an early interest in finance and investing. He studied at the University of Cambridge, where he earned a degree in engineering. However, his passion for the financial markets led him to shift his focus to investment management.
Bolton's career in finance began when he joined the investment bank Keyser Ullman in 1971. In 1979, he joined Fidelity International, the global asset management company, as a portfolio manager for the Special Situation fund. In the early years, he also supported managing other funds, such as the European Growth and European Value funds.
The Special Situations fund grew in size during the 1980s and 1990s, thanks to the value investments from Bolton. By 2007, the fund had become the UK's largest open-ended fund (OEIC) with £6bn of assets under management.
After the fund was split to enable it to continue to be actively managed, Bolton took a step back. Even though he took on other fund management roles in the years since, he’s now retired and focuses on other passions, such as composing music.
Fidelity Special Situations
For much of his 28-year tenure in stock picking for the fund, it was global in nature. It has now split to have a UK and a non-UK version, but the purpose of the fund hasn’t changed. In line with the current prospectus:
The Fund will invest at least 70% in equities (and their related securities) of UK companies (those domiciled, incorporated or having significant business in UK and those which are listed in the UK). The Investment Manager will focus on companies it believes to be undervalued and whose recovery potential is not recognised by the market. It is not restricted in terms of size or industry. The Fund is actively managed without reference to a benchmark.
From when Bolton took over the fund to the split in 2007, the performance was outstanding, returning 14,124.1% over this 28-year tenure:
Alex Wright (who later took over in running the fund) commented that:
“It is like taking over Man United after Alex Ferguson, because you can never really hope to emulate what he did over such a long career when he ran the fund.”
Below, we outline four of Bolton’s best stock picks over the time he ran the fund:
Vodafone Group plc (VOD):
Date of Investment: Throughout the late 1990s.
Rationale: Bolton recognised the growth potential in the telecommunications sector and saw Vodafone as a key player. His investment in Vodafone turned out to be highly profitable, with the share price trading from 50p in 1995 to 400p at the turn of the century (see below):
Reed Elsevier (now RELX Group):
Date of Investment: Exact dates may vary, but it was a notable holding during Bolton's tenure.
Rationale: Bolton identified Reed Elsevier, a multinational information and analytics company, as a solid investment. His belief in the company's strength in providing professional information solutions across various industries was well-founded, and the stock performed well during his management.
BG Group (now part of Royal Dutch Shell):
Date of Investment: Bolton held BG Group in his portfolio during the early to mid-2000s.
Rationale: His investment in the British multinational oil and gas company showcased his confidence in the energy sector. It also tied in with his value methodology, as the firm de-merged in 2000 and was seen to be undervalued at the time, hence why Bolton added it to the portfolio.
GlaxoSmithKline plc (GSK):
Date of Investment: Late 1990s onwards.
Rationale: Bolton invested in pharmaceutical giant GlaxoSmithKline, recognising the stability and growth potential in the healthcare sector. Even though this was seen as a buy-and-hold position, we’d imagine some profit was taken around 2000 after the stock rallied 200% in less than four years.
Quotes to live by
On Investment Strategy:
"Successful investing is about having people agree with you … later."
On Market Timing:
"There's always a good reason not to be in the stock market. The issue is, is there a good reason to be in?"
"You need to have the temperament to do nothing when there's nothing to do. Most people, if they don't know what to do, act; the secret is to do nothing."
On Risk Management:
"One of the big mistakes investors make is that they worry about what they don't know. The real challenge is to know what you don't know and be comfortable with it."
On Long-Term Perspective:
"I always tell people I'm not interested in the next quarter, I'm interested in the next quarter of a century."
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