Has Anthony Bolton got it wrong again?

The once-legendary fund manager Anthony Bolton is set to retire in 2014. But once again, he could be getting his timing all wrong, says Merryn Somerset Webb.

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.

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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.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.