Fidelity funds dumped from buylist ahead of Spreadbury exit

Fidelity International products accounted for half of the six sterling bond funds dumped from the FE Invest Approved List rebalance, while all Invesco Perpetual UK equity products have been removed from the preferred funds list.

Fidelity Moneybuilder Income, Strategic Bond and Extra Income were all removed from the buy list.

The Fidelity funds were removed due to poor credit picking and uncertainty following the announcement of Ian Spreadbury’s retirement, said FE research manager Charles Younes. Spreadbury (pictured) is the primary manager on all three funds, which total £5.9bn in assets.

A Fidelity spokesperson pointed to the funds’ longer term track records and said they have performed in line with their objectives. “We believe being defensively positioned at this late stage of the global economic cycle is warranted, especially in light of the recent volatility in markets including credit.”

The £215.1m Fidelity Global High Yield fund, co-managed by Peter Khan and Kris Atkinson, has been added to the preferred funds list.

Bond managers struggle with downside protection

Within sterling fixed income funds, the £4.5bn Invesco Perpetual Corporate Bond, £135m Aviva Investors High Yield Bond and £751.3m Schroder High Yield Opportunities have also been removed.

FE also dropped the £300.8m M&G Index Linked Bond fund, managed by Ben Lord, stating it had become less active since the departure of Mike Riddell.

“The last 12 months have proven to be extremely challenging for bond fund managers. They have really seen their capacity to protect from the downside tested and many managers have fallen short in their attempts,” Younes said.

The £792.7m Blackrock Corporate Bond fund, managed by Ben Edwards, has been added because performance is driven by bond selection rather than large duration or macro calls, said Younes. However, the £172.1m Man GLG Strategic Bond fund, co-managed by Craig Veysey and Andy Li, was added because of its dynamic duration management.

Invesco UK equities all out

Meanwhile, both IA UK All Companies funds removed from the list were from Invesco Perpetual.

The £186.70m Invesco Perpetual UK Focus and £374.9m Invesco Perpetual UK Strategic Income funds, managed by Martin Walker and Mark Barnett respectively, were already downgraded to the lowest FE Crown rating in July. “Across the Invesco UK equity desk we have highlighted some weakness in stock picking, which is why we have sold all exposure to it,” Younes said.

Henry Dixon’s £624.2m Man GLG UK Income, in the IA UK Equity Income sector, and the £456.85m CFP SDL UK Buffettology, managed by Keith Ashworth-Lord and in the IA UK All Companies sector, are the two UK Equity funds to be added.

Younes said: “Despite the stark difference, the two managers have produced an outstanding track record over the last three years and have raised a lot of assets.”

In US equities, the Schroders US Mid Cap and US Smaller Companies funds, both managed by Jenny Jones, were ousted. FE downgraded the mid cap fund to the lowest possible Crown rating in July, while Morningstar downgraded funds run by Jones in June due to high fees.

Winners and losers of FE Invest’s preferred fund list rebalance