The heirs of legend Anthony Bolton carry on his legacy

Investment guru Anthony Bolton's most recent successors, who previously worked at Fidelity, are exhibiting promising signs of increasing returns

What do they do correctly?

Fund managers still regard Anthony Bolton as a legend. He produced a compound investment return of 19.5 percent during the 28 years he oversaw the Fidelity Special Situations Fund, which was 6 percent higher than the market. He mostly used a contrarian approach, investing in stocks that the majority of investors ignored or despised.

The fund was divided into two parts upon his resignation in 2007: one for UK investments and the other for foreign investments. Under a series of managers, the funds then lost prominence, but there are clear indications of an improvement.

Under managers Alexander Wright and Jonathan Winton, the UK fund that keeps the Fidelity Special Situations name and the Fidelity Special Values (LSE: FSV) investment trust that employs the same approach have consistently outperformed the UK market over the past three years. With a 19.1 percent return in sterling in 2025 compared to the MSCI ACWI index's 13.9 percent return, the Fidelity Global Special Situations Fund is likewise outperforming.

Problems with BFIA today. The global fund is "style agnostic" now, according to Christine Baalham, who joined Tom Record as co-manager in 2024. However, it is determined more by the choice of stocks than by more general factors. She declares, "I won't pretend I can call the market outlook." Depending on which perspective I choose, I could be incredibly optimistic or extremely pessimistic. Both reasons to be thrilled and reasons to be afraid exist. Few managers put it so succinctly.

While growth is sought "where the opportunity is much greater than the market believes," Anthony Bolton's quest for unconventional concepts with untapped potential is not overlooked. According to Baalham, consider Bayer, which is run by pharmaceutical analysts who despise the agricultural sciences portion of the company. In addition to having "some really good pharmaceutical products," Bayer also has "a high-quality seeds business and the crops business is nearing a resolution of litigation." It is traded at less than nine times its earnings.

Rewards in bottlenecks: Fidelity Global Special Situations Fund.

The 88 holdings in the Fidelity Global Special Situations Fund portfolio are all diversified, with none exceeding 3%. At the end of the quarter, the fund's 2 percent stake in Nvidia was 2.7 percentage points underweight, and it had no stake in Apple, which makes up 4.2 percent of the index. According to Baalham, the stock is trading on nearly 30 times earnings. Given Apple's 30% gain and Nvidia's 14% gain in the current quarter, this could be a problem for relative performance. However, Baalham claims that other holdings cover their exposure to AI. "The bottlenecks, which are memory and power, are the rewards," she claims. Due to a shortage of memory chips, the Playstation 6's launch has been postponed, which has led to a holding in chipmaker Samsung. The fund is invested in Siemens Energy, NextEra, and SSE because data centers are increasing the demand for energy. But "we keep an eye on quantum computing," which could drastically lower power needs.

Analogue semi-conductors, which control the human-machine interface, are another bottleneck. Prices will increase when demand in these markets increases because there is no spare capacity. This thesis serves as the foundation for a holding in STMicroelectronics. While other investors appear to be preoccupied with geopolitics, we are discovering some truly intriguing ideas brought about by technological advancements. On the other hand, despite owning US producer Diamondback Energy, services firm Baker Hughes, and liquefied natural gas exporter Cheniere Energy, the fund is neutral on oil and gas.

One of Fidelity's main advantages is the strong bond between managers and analysts, just as it was under Anthony Bolton. An international team of 139 equity analysts supports Record and Baalham. They are in charge of 3.6 billion in Global Special Situations and an additional 6 billion.

Since investment trusts typically outperform sister open-ended funds managed by the same manager, it's unfortunate that the two don't also manage one. Take note, directors of international trusts that consistently perform poorly.