Has Anthony Bolton got it wrong again?

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.

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.