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China volatility rocks Bolton fund

Anthony Bolton blames exposure to volatile medium and smaller-cap Chinese stocks for the Fidelity China special situations invest-ment trust’s 28.9 per cent fall in net asset value in the first half of the year.

The trust underperformed its MSCI China index benchmark, which was down by 24.5 per cent.

Bolton blames the trust’s exposure to more volatile medium and smaller-cap Chinese stocks and gearing levels. He says he was wrong to expect Chinese stocks to decouple from the West.

Bolton says September was “a brutal period” for Asian markets. He says: “My optimism on markets generally and China specifically has been tested. Over and over again, I have asked myself whether I should revise my view in light of the deteriorating position in Europe and potentially also in the US but I have concluded that the world is not in such a bad position as many think.”

Bolton says inflation is starting to improve, with Chinese growth expected to reach 8 per cent but any deterioration in the global economy could see this shrink to 5-6 per cent.

He says: “The next 12 months should be a defining moment for Chinese investment when investors realise the economy is not about to collapse and the tightening period is over.”

Hargreaves Lansdown head of research Mark Dampier says: “Everyone investing in China has had a difficult time, he is only 4 per cent off the benchmark. No one suggested selling out of the fund when he was doing well.”


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There is one comment at the moment, we would love to hear your opinion too.

  1. We still favour Fidelity’s various MoneyBuilder and Strategic Bond funds but, with the exception of SE Asia, the performance of all their equity funds seems to have faded steadily and badly over the past few years ~ European, American, Special Sit’s, Global Special Sit’s (a dud from the word go) and now Mr Bolton’s China Special Sit’s Investment Trust.

    I’m really quite surprised that anyone felt confident about recommending an (almost) Emerging Market Investment Trust (which means it’s geared) at launch just because it has Anthony Bolton at its helm. China is a very different proposition from the UK (for a start, it has about four different stock markets) and, at the age of 62, for how much longer is Mr Bolton likely to continue managing the fund? Such a combination of factors, to my mind, represents an extremely speculative investment proposition.

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