Moneyspider in the News

'Britain's biggest group has fallen from grace in a surprising new survey'

The Sunday Times

FIDELITY, Britain's biggest independent fund group has been labelled as one of the worst managers for 2006.

The firm which manages Pounds 22.5billion of savers' cash, ranked 41st out of the 54 fund groups analysed by Moneyspider, a research firm, in a survey released last week.

Fidelity dropped a staggering 32 places down the ranks over the year because of the underperformance delivered to its tens of thousands of investors.

It was by no means the worst in the survey - NatWest, Scottish Widows, HSBC, Abbey and Halifax all feature below Fidelity in the rankings - but it was by far the biggest surprise.

At the other end of the scale, top spots went to "boutique" managers First State, Rathbone, St.James's Place and Neptune.

Advisers said the research showed the importance of looking beyond established brands this Isa season. Even the biggest groups tend to excel in just one or two areas and are often average or even poor in others.

Bill Ross of Moneyspider said: "It is important for investors, especially those considering where to invest their Isa allowance, not to just go for high profile fund managers, because some of the biggest and best- known management groups offer some of the worst-performing funds."

Moneyspider rates all the funds in a group's range against their peers and rates performance from A to E.

At the start of 2006, 63% of Fidelity's funds were classed in either the A or B category, but today only 37% of the group's schemes are present there.

Although Fidelity's flagship Pounds 3billion UK Special Situations fund, run by Anthony Bolton, delivered one of the more respectable performances, it still failed to beat the market, achieving 16% against a return of 17% from the FTSE All-Share Index.

The Pounds 795m Fidelity UK Growth fund was even more disappointing, returning only 7% in 2006, while the Pounds 1.4billion Fidelity American fund fell almost 3%. Over the same period America's S&P index grew by 2%.

Last year was difficult for Fidelity. Bolton's Pounds 6billion UK Special Situations portfolio was split, and one half was relaunched as the Global Special Situations fund under Jorma Korhonen. As a result, it is believed Fidelity haemorrhaged more than Pounds 1billion in 2006. Further upheaval is expected this year when Bolton steps down after 28 years.

Mark Dampier of Hargreaves Lansdown, an adviser said: "I think that right now Fidelity is a one-trick pony. When Anthony Bolton leaves, unless something drastic happens, I cannot think of any reason to recommend a UK Fidelity fund."

Dampier said Artemis UK Special Situations was a good alternative. It beat Bolton's fund last year, achieving a return of 19%.

For investors in the Fidelity UK Growth fund, Dampier suggests Jupiter UK Growth as a far superior alternative - in 2006 it returned a robust 28%.