Rated Fund 2013-2017. A contrarian approach looking for change potential
This is Fidelity's flagship investment trust, launched in 1994 under the management of the legendary Anthony Bolton. After he stepped down in 2007, the trust's performance faltered. However, since Alex Wright took over as manager in September 2012, its performance has improved markedly.
Wright takes a contrarian approach, looking for out-of-favour stocks that he believes are mispriced. The trust can invest across the size spectrum, but Wright has given it a bias towards small and medium-sized companies. This has generally been an advantage in recent years but it can lead to short-term fluctuations.
Wright explains that there are two key elements to his investment approach. One is his management of risk. He looks for companies where there is limited risk of price falls. In other words, he wants to invest in companies that have exceptionally cheap valuations or some kind of asset that should stop their share prices falling below a certain level.
Second, he looks for unrecognised growth potential. He wants to see evidence of a company embarking upon a period of positive change. Once this change begins to be recognised by the market, there is potential for substantial upside.
Wright also manages the Fidelity Special Situations fund. He takes the same investment approach with both and there is a significant overlap in their holdings. However, he says that because the trust is closed-ended, it gives him confidence to include some smaller and more illiquid holdings in the portfolio.