Join our community of smart investors

Anthony Bolton to retire in April 2014

The manager of Fidelity China Special Situations names his successor, but remains "a great bull of China".
June 18, 2013

Anthony Bolton, manager of Fidelity China Special Situations investment trust (FCSS), is retiring in April 2014 and will be replaced by Dale Nicholls.

While Mr Bolton has already informed shareholders that he would remain as manager until that date, the choice of his successor is a surprise.

Mr Nicholls has 17 years' investment experience and has been manager of the Fidelity Pacific Fund since 2003. Some analysts expressed surprise that a manager with the experience of running a pure Chinese equity mandate wasn't chosen, particularly as Fidelity has one or two very strong candidates in this area. Mr Nicholls only invests in China as part of his mandate and has no experience of managing an investment trust.

However, as both Mr Bolton and Mr Nicholls were keen to point out, Mr Nicholls' more in-depth knowledge of the entire region (including Japan) and the opportunities Chinese companies may have competing on a regional scale may well be advantageous. Mr Bolton said: "The one thing I've lacked is knowledge about markets such as Korea and Taiwan."

Fidelity emphasised the overlap in styles between the two managers and their shared enthusiasm for smaller companies. Both managers are overweight in IT and underweight financials. Mr Bolton said: "I don't think there will be many changes to the portfolio under Dale."

Fidelity China Special Situations' performance this year has been markedly better than the first two years, and Mr Bolton, whose reputation as the UK's best ever fund manager has been tarnished by his "disappointing" performance in China, wanted a good end to a long and successful career. He admitted that China has proved tougher than expected in the sense that he has had "a bull market approach in a market that has gone down".

However, he still remains "a great bull of China", pointing out that he still has nine months to "do my damndest to turn performance around".

Investors Chronicle view:

Although the launch of Fidelity China Special Situations was high profile, we did not recommend the trust to investors. In fact we ran a sell tip on the trust in 2011, pointing out that it was too pricey. However, if you did invest in Fidelity China Special Situations there is no need to panic, particularly as the trust is already trading at a 9 per cent discount compared to its 12-month average discount of 4.5 per cent, so redeeming your shares now will lock in any losses. Those investing for the China story rather than simply because Anthony Bolton is running the money, should give the new manager the benefit of the doubt in the new year. However, for new monies into China, we prefer JP Morgan Chinese Investment Trust (JMC). This trust is a member of the IC Top 100 Funds and is currently trading at a 14 per cent discount compared to its 12-month average discount of 11 per cent. This trust has a longer pedigree and a wider mandate than Fidelity's offering. It is benchmarked against the MSCI Golden Dragon Index, which captures the equity market performance of large- and mid-cap China securities.

Fidelity China Special Situations vs JP Morgan Chinese

Annual returns %201120122013 to 31 May
Fidelity China Special Situations
Price-37.9216.0211.49
NAV-32.1813.1219.75

JPMorgan Chinese Investment Trust

Price-30.1724.564.11
NAV-22.9421.2411.91
MSCI China GR USD-17.6317.72.63