Fidelity's Spreadbury: 4 Rated Funds Under Review

Following the announcement that Fidelity's Ian Spreadbury will be retiring at the end of the year, Morningstar analysts have placed four funds under review

Jonathan Miller 2 October, 2018 | 6:28AM


Analyst ratings Fidelity under review bonds fixed income funds analysis

Fidelity MoneyBuilder Income: Under Review

Ian Spreadbury, a fixed income veteran, will be retiring on 31 December 2018. He has been running this fund since its inception in 1995 and has consistently implemented the same approach. Sajiv Vaid has been co-manager since 2015 and was brought in from Royal London Asset Management, with an eye to succession planning.

The change will see Vaid assume lead responsibility on the fund, working closely with Kristian Atkinson who will step up to have more involvement in the strategy. Atkinson is manager of the Fidelity Global Investment Grade Corporate Bond fund since August 2016 and joined the group’s fixed income team in 2000. The announcement of Spreadbury’s retirement is not a surprise and we appreciate the element of continuity that Vaid brings to the investment process.

Since 2015, the duo had been operating collegially, with each portfolio manager having veto power over any decisions to be implemented in the portfolio. While we have a high opinion of Vaid and the team’s resources, Spreadbury’s retirement is ultimately a loss for the group, and we have yet to see how decision-making plays out in the new set up. Accordingly, we believe this warrants a re-assessment of our overall view. As such, the fund has been placed Under Review, from a Morningstar Analyst Rating of Gold.

Fidelity Strategic Bond: Under Review

Fidelity Strategic Bond’s current co-managers, Tim Foster and Claudio Ferrarese, will assume joint responsibility for this portfolio on 1 January. The duo became co-managers in April 2017 and are portfolio managers within Fidelity’s London-based fixed-income team. They have both been with the firm for over 10 years. The fund reflects the managers’ top-down economic views across global fixed-income markets.

Spreadbury focused on asset allocation and credit selection, but over the last few years the strategy has evolved with an increase in tactical plays. We believe that the three portfolio managers complemented each other well, with Foster bringing an inflation-linked and total return background, while Ferrarese has a quant background. However, Spreadbury has the most varied experience amongst the trio and had a key role in bringing the portfolio together.

Ultimately, we believe this will be a loss and given the announcement of his upcoming departure, the fund has been placed Under Review.

Fidelity Flexible Bond: Under Review

Fidelity Flexible Bond’s current co-managers, Tim Foster and Claudio Ferrarese, will be assuming joint responsibility for this portfolio on Spreadbury’s retirement. Foster became co-manager in February 2016 and Ferrarese was also added as co-manager in April 2017. They are both portfolio managers within Fidelity’s London-based fixed-income team and have both been with the firm for over 10 years. The fund reflects the managers’ top-down economic views across global fixed-income markets.

Spreadbury focused on asset allocation and credit selection, but over the last few years the strategy has evolved with an increase in tactical plays. We believe that the three portfolio managers complemented each other well, with Foster bringing an inflation-linked and total return background, while Ferrarese has a quant background. However, Spreadbury has the most varied experience amongst the trio and is part of bringing the portfolio together.

Ultimately, we believe this will be a loss and given the announcement, the fund has been placed Under Review, having held a Morningstar Analyst Rating of Silver.

Fidelity MoneyBuilder Balanced: Under Review

Spreadbury’s involvement in this fund dates back to 1995 and centres around the fixed income sleeve, which is around a third of the portfolio. The remaining exposure, invested in equities, is run by Michael Clark who remains in place. Spreadbury’s retirement will see Sajiv Vaid assume responsibility for the fund’s fixed income sleeve, effective 31 December 2018. He joined Fidelity International from Royal London Asset Management in 2015, with an eye to succession planning.

Upon joining he became co-manager of the Fidelity Moneybuilder Income fund, the group’s flagship strategy in the UK Corporate Bond space, which Spreadbury had managed since inception in 1995. While we have a high opinion of Vaid and the team’s resources, the management of this fund’s fixedincome sleeve has so far largely relied upon Spreadbury’s allocation decisions in different parts of the bond market.

Accordingly, we believe Spreadbury’s retirement is a loss to the group and the change warrants a re-assessment of our overall view. As such, the fund has been placed Under Review, from a Morningstar Analyst Rating of Bronze

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Fidelity Flexible Bond Y-Dis-GBP1.00 GBP0.10-
Fidelity MoneyBuilder Balanced Y Inc55.18 GBP0.20
Fidelity MoneyBuilder Income35.66 GBP0.42
Fidelity Strategic Bond Net Y117.80 GBP0.17

About Author

Jonathan Miller  is Director of Manager Research, Morningstar UK