The big news in the world of fund management this morning is the return of Anthony Bolton to running money.
Bolton, arguably one of the most successful investors of his generation, will be relocating to Hong Kong to manage a new China fund for Fidelity. The new fund will invest in China and China-related opportunities. It is likely to be launched at the end of the first quarter next year.
Anthony Bolton has an awesome reputation.
As manager of the Fidelity Special Situations Fund for 28 years, he achieved an annualised return of 19.5% (compared to 13.5% for the FTSE All-Share Index). This means he turned £1,000 invested in 1979 into £148,200 by the end of 2007.
He picked up a reputation as a ‘quiet assassin’ after flexing his muscles as a major shareholder in Carlton and Granada, resulting in the removal of flamboyant chairman Michael Green.
In launching this new fund, we believe that Fidelity could face two challenges.
Firstly, whilst there is undoubtedly a strong growth story relating to the Chinese economy, actually getting access to this by investing in Chinese companies has been difficult. By extending the remit of this fund to include China-related opportunities, Bolton will not be restricted to investing solely in Chinese companies.
Secondly, there is a danger that investors will follow Bolton blindly into any new fund, regardless of their tolerance to investment risk. UK Special Situations is a risky asset class but Chinese equities are even higher risk. Fidelity might consider placing a higher than average minimum investment requirement on this fund for retail investors for this very reason.