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Wright handed Special Situations as Fidelity's Shah exits fund management

by Sarah Miloudi on Sep 03, 2013 at 10:34

Wright handed Special Situations as Fidelity's Shah exits fund management Sanjeev Shah is to step down from fund management after 17 years in the industry, Fidelity has announced.

AAA-rated Alex Wright will take over his Special Situations fund, a move that follows closely after small cap star Wright took over Shah's investment trust, Fidelity Special Values.

Fidelity said the pair would work together over the next few months to ensure a smooth transition of the £2.7 billion portfolio.

Wright will take on full responsibility for Fidelity Special Situations on 1 January 2014.

Turnaround

Despite suffering a tough patch - largely due to a sizable position in banks dragging down performance - Shah (pictured) has recently staged a turnaround and three-year are now ahead of comparator indices.

Over 36 months the Citywire Selection fund has returned 46.9% versus a rise of 40.1% by the FTSE 100 TR Index, and 43.4% by the FTSE All Share TR Index.

However his Special Situations fund sits within a tough sector filled with a host of star names such as Richard Buxton, Nick Train and Julie Dean, and according to Citywire classifications Shah's fund ranks 117th in the 270-strong peer group.

How Shah and Wright compare

In a media briefing following Shah's announcement, he and Wright told investors the handover of Fidelity Special Situations would be gradual, and not to expect big shifts in asset allocation.

As this table from Fidelity shows, the pair share a similar contrarian approach to investing, and as outlined by Shah, they both believe pharmaceutical stocks are undervalued and that banks offer a source of longer-term capital growth.

Moreover, while Shah typically has a longer holding period titan Wright, both invest across the market capitalisation spectrum and use shorts to bet on overpriced stocks.

Alex Wright Sanjeev Shah
Contrarian / Value Contrarian / Value
Buys unloved companies with downside protection and unrecognised growth options Buys unloved stocks where intrinsic value estimate is significantly higher than market value
All cap All cap
100+ long positions 100+ long positions
Active money 80%+ Active money 80%+
Average holding period c.18 months Average holding period c.24 months
Short exposure up to 10% Short exposure up to 10%
Limited use of options Options to overwrite / hedge

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