View more on these topics

Winterflood warns on Bolton’s Fidelity China Special Sits

Anthony Bolton

Winterflood Investment Trusts has issued concerns over Anthony Bolton’s Fidelity China Special Situations trust, questioning its suitability for retail investors

The £482.2m trust has underperformed its benchmark since launch in April 2010, with its net asset value falling 23 per cent compared with the 14 per cent decline seen in the MSCI China index.

Bolton has described the underperformance, which has been attributed a bias to small/mid caps and the trust being geared in a falling market, as “disappointing”.

In a note stemming from an analyst meeting with Bolton last week, Winterflood says: “We have increasing concerns with this fund, not all of them centred on its disappointing performance.”

Winterflood says the fund’s level of gearing – which stands at about 20 per cent – adds “substantial risk” to the portfolio. Meanwhile, the manager’s use of hedging creates complexity around the fund and dilutes its investment message.

Furthermore, the analyst highlights the trust’s stock analysis as another area of concern. Half of the portfolio is covered by Fidelity’s main analyst group while the remainder is overseen by one dedicated small-cap analyst.

“Although we would expect the fund to perform strongly in a bull market, due to its gearing and mid/small cap bias, we would question its suitability of this fund for the retail investors that make up the bulk of its shareholder base,” Winterflood says.

Last week, Numis said it would back Bolton to turn the investment trust’s performance around, but warned it was “not for the faint hearted” with its structural gearing and bias towards small caps.

Fidelity declined to comment.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm