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China fund could be the biggest-ever opener for a trust

If Fidelity meets its target of 3630m for Anthony Bolton’s China special situations fund, it will be the biggest investment trust cash-raising ever seen.

Investment trust experts have reacted positively after Fidelity unveiled the details of the raising. The trust has a minimum investment of £2,500 and is only available for lump sum investments. It has an annual charge of 1.5 per cent.

The public offer opens on February 26 and closes on April 5, with admission to the London Stock Exchange and dealing to start on April 19.

Winterflood Securities head of research Simon Elliot says Bolton is known for his time on UK and European equities but he has been involved in the Chinese market for some years.

Bolton also has investment trust experience, having managed the Fidelity European values and special values funds.

Elliot says: “The key point is that Fidelity has a huge long-standing team in that region and Anthony always says his success has been helped by the backing of his analyst in the UK. It is not a one-man show, so fears over him only committing to two years should not be overstated.”

The fund will be China-listed and will be able to invest in securities in China and Hong Kong and Chinese companies listed elsewhere. It will be available in a Fidelity Isa in both tax years and will pay 0.5 per cent trail commission within an Isa.

Charles Stanley head of investment trust research Stephen Peters says the trust may end up in the FTSE250, given the managers’ history and support, but he warns that new issues by top managers can often be seen as the top of the market for investment trusts.

“There will be lots of retail investors who follow the name, rather than looking at whether China is suitable. It also pays trail commission, which is uncommon.”

Miton Asset Management fund manager Nick Greenwood says the launch is a symptom of the fact that for an investment strategy to be successful these days, it needs to be closed rather than open-ended.

He says: “People seem to regard the closed-ended sector as being in decline but, quietly over the past five years, it has grown from £40bn to 3100bn and it is because people are moving away from the old-style closet trackers. The fact that one of the biggest launches in the cycle is closed-ended reflects that.”



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