EDITOR'S LETTERMerryn Somerset Webb
I’m still cross with Bolton
Back in 2010, Fidelity launched its China Special Situations investment trust with Anthony Bolton at the helm. Anyone who was a MoneyWeek reader at the time will remember how cross the launch made us.
We thought it was an irresponsible time to be encouraging small investors to pile into China. We were horrified by the way the fund was marketed. Very few investment trusts ever paid commission to financial advisers even back in the days when they were allowed to. This one did.
We hated the fee structure. The management fee was a horribly high 1.5%, with up to another 1.5% to be paid out in performance fees (for relative rather than absolute performance, of course). The fee has now been cut to 1.2%, but even that means that Fidelity is getting in revenues of nearly £9m a year for running the fund. Finally, we were unhappy about Bolton’s short-term commitment. All the marketing material was about Bolton, but at the time, he only promised to run the fund for two years.
To me, looking at it back then, the launch seemed to sum up pretty much everything that was wrong with the fund-management industry: it came on the back of a bandwagon; it sold itself on irrelevant past performance (that Bolton did well in the West during one of the greatest bull markets of all time told us nothing about how he was going to do in China during a period of extraordinary economic turbulence); and it was priced with a level of arrogance almost unique to the financial sector (I say almost only because I have just had to buy some new ink cartridges for my printer).
• Read the full editor’s letter here: I’m still cross with Bolton.