Regular readers will know that I have spent much of the last few years feeling extremely irritated with Anthony Bolton. For a long time he was one of the few fund managers in the UK it appeared ordinary investors could trust to make them decent (if expensive) long term returns via his Fidelity Special Situations Fund. Then, having retired triumphant, he returned to the fray a few years back, apparently with a plan to lose the faithful everything he had previously made for them.
The Fidelity China Special Situations Investment Trust was launched in the wrong market at the wrong time and very much at the wrong price. At a time when most investment trusts were already beginning to murmur among themselves about cutting fees, Bolton's new trust came in with a 1.5% management fee and a performance fee. Even worse, Fidelity used some of that high fee base to pay commission to IFAs to shovel people into the fund.
That worked: £460m poured in and the trust immediately started trading at a premium. Then it stopped trading at a premium. It is now down a few per cent on its launch price and trading at a discount of over 8% to net asset value (NAV). It has also underperformed most of its peers.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Bolton has now confirmed that he is to retire (again) in April 2014. You can read my previous thoughts on all this here and here. But I wonder if Bolton isn't making another mistake by going in 2014.
I've been against investing in China for many years now and I'm not suggesting (for a second) that any rushing in is done. But I would refer you to this column I wrote recently in which I point out that good stock market returns often come when growth slows and companies start prioritising profits over volumes.
Look to Japan and you will see that the real stock market gains came after its period of 10%-plus annual GDP growth rather than during it. If the same happens in China - where growth rates are fast heading down to 5% - the market there will be entering a serious long term bull market around the same time Bolton is boarding his flight home.
That said, it isn't clear that the Fidelity fund is the one to buy when the times comes. The fees might have been cut (albeit not enough) but one of the problems Bolton has wrestled with has been his lack of in-depth knowledge of China. But instead of replacing him with a China expert, Fidelity has gone for long term Fidelity employee Dale Nicholls. Nicholls has significant regional experience in Asia, but no dedicated China experience. That seems a shame.
PS If you want to know what happened when Bolton and I actually met to talk about the fund you can read my 2011 interview with him here.
-
Trouble brews in B&M as bargain shops take a hitOpinion Once a stock market darling, B&M's share price has slumped. What has gone wrong for bargain shops?
-
US and China reach a ceasefire in their trade war after talks in LondonThe US and China's trading relationship – the most important one in the global economy – is back on track. Will the truce last?
-
House prices to crash? Your house may still be making you money, but not for much longerOpinion If you’re relying on your property to fund your pension, you may have to think again. But, says Merryn Somerset Webb, if house prices start to fall there may be a silver lining.
-
Prepare your portfolio for recessionOpinion A recession is looking increasingly likely. Add in a bear market and soaring inflation, and things are going to get very complicated for investors, says Merryn Somerset Webb.
-
Investing for income? Here are six investment trusts to buy nowOpinion For many savers and investors, income is getting hard to find. But it's not impossible to find, says Merryn Somerset Webb. Here, she picks six investment trusts that are currently yielding more than 4%.
-
Stories are great – but investors should stick to realityOpinion Everybody loves a story – and investors are no exception. But it’s easy to get carried away, says Merryn Somerset Webb, and forget the underlying truth of the market.
-
Everything is collapsing at once – here’s what to do about itOpinion Equity and bond markets are crashing, while inflation destroys the value of cash. Merryn Somerset Webb looks at where investors can turn to protect their wealth.
-
ESG investing could end up being a classic mistakeOpinion ESG investing has been embraced with enormous speed and zeal. But think long and hard before buying in, says Merryn Somerset Webb.
-
UK house prices will fall – but not for a few yearsOpinion UK house prices look out of reach for many. But the truth is that British property is surprisingly affordable, says Merryn Somerset Webb. Prices will fall at some point – but not yet.
-
This isn’t the stagflationary 1970s – but neither is it the low-rate world of the 2010sOpinion With soaring energy prices and high inflation, it might seem like we’re on a fast track back to the 1970s. We’re not, says Merryn Somerset Webb. But we’re not going back to the 2010s either.
