Savers have been left confused after Fidelity, Britain’s largest fund firm, appointed a virtually unknown manager to run half its £6 billion Special Situations fund from January.
Many existing investors will now be considering jumping ship, but financial advisers are urging them to stick with the fund to give the new manager, Jorma Korhonen, a chance to prove himself.
Anthony Bolton, who has managed the top-performing Special Situations fund for 26 years, is stepping down at the end of 2007 and Fidelity today launched complicated reconstruction proposals to deal with his departure.
The fund will be split into two separate schemes on September 16, subject to a shareholder vote. One half will be renamed the Global Special Situations fund, with the other remaining as a more UK-focused fund.
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Bolton will continue to manage both funds until the end of the year, after which Korhonen will take over the global half. Bolton will hand over the reins of the second fund to an as-yet unnamed manager at the end of 2007.
Korhonen has been with Fidelity for ten years, but he has never managed UK money before. He runs two global equity funds, worth just $200m, for Australian and Japanese investors. This has raised concerns about his lack of experience in the British market.
However, advisers have taken comfort from the fact that he was Bolton’s first choice for the job and are urging existing investors to back the split.
Darius McDermott of Chelsea Financial Services said: “Korhonen was hand picked by Bolton as the best man to run a Global Special Situations fund. That is the highest possible recommendation. Chelsea is therefore recommending that unit holders vote for the split.”
If the vote goes ahead, existing investors will end up with half their units in the Global Special Situations fund and half in the more UK-focused scheme.
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Philippa Gee of Torquil Clark, another adviser, said: “I would recommend that existing investors stick with the 50:50 split, but if you are uncomfortable with exposure to global markets, you could switch half your units into the UK-focused fund. But there will be charges for doing so.”
Over the next few days, existing investors will receive packs containing details of the split ahead of vote in September.
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