Bolton unveils his new China venture
Anthony Bolton's new China trust will aim to hold £630 million and will be available for ISA investors at launch on 26 February.
The close-ended investment company is targeting an initial capital raising of around £630 million. Fidelity says it will invest in a “diversified” portfolio primarily made up of securities issued by companies listed in China, or Hong Kong and Chinese companies listed elsewhere.
"I am very confident that there will be very many stock-picking opportunities in China in the years to come,” says Bolton.
Investors will be able to apply for shares from 26 February, with the closing date currently scheduled for 26 March (for paper applications) and 5 April (for online ones). However, investors can register an interest now on the Fidelity website.
On the 19 April, the company will be admitted onto the London Stock Exchange, and dealing in new shares will commence.
Shares will be issued at £1 and will be eligible for ISA investments for both the current and the next tax year.
Bolton is best known for running Fidelity's Special Situations Fund, which he managed from its launch in December 1979 until the end of 2007. However, some critics have warned that he lacks experience of the emerging markets, with most of his experience from investing in the UK and Europe.
But Bolton dismisses such fears: “I see many similarities with investing in Europe in the early part of my career. Then, my longer-term, research-led approach was considered unusual in a market more used to short-term trading but it proved to be successful.
"I think the same will be the case in China and I expect that my experience in Europe will be helpful as I see the composition of the market shifting from an emphasis on manufacturing and financials to include more service-oriented companies."
Bolton says he will manage the portfolio using a contrarian approach to investing, to achieve the objective of long-term growth. He will be supported by Fidelity's Asian investment team.
Investment trusts are companies that invest money in other companies and whose shares are listed on the London Stock Exchange. As with unit trusts, private investors buying shares in an investment trust are buying into a diversified portfolio of assets (to reduce risk), which is managed by a professional fund manager. Investment trusts differ from unit trusts in two important ways: they are listed on the stockmarket and so are owned by their shareholders and are closed-ended funds with a finite number of shares in issue. This means the share price of investment trusts might not reflect the true value of the assets in the company (known as the net asset value, or NAV) and if the NAV value of a share is £1 and the share price in the market is 90p, the trust is said to be running a discount of 10% to NAV. But this means the investor is paying 90p to gain exposure to £1 of assets. Investment trusts can also borrow money and use this money to buy investments. This is known as gearing and a geared trust is thought to be more of an investment risk than an ungeared one.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
An individual employed by an institution to manage an investment fund (unit trust, investment trust, pension fund or hedge fund) to meet pre-determined objectives (usually to generate capital growth or maximise income) in prescribed geographic areas or investment sectors (such as UK smaller companies, technology or commodities). The manager also carries the responsibility for general fund supervision, as well as monitoring the daily trading activity and also developing investment strategies to manage the risk profile of the fund.
Generic, loosely-defined term for markets in a newly industrialised or Third World country that is in the process of moving from a closed economy to an open market economy while building accountability within the system. The World Bank recognises 28 countries as emerging markets, including Argentina, Brazil, China, Czech Republic, Egypt, India, Israel, Morocco, Russia and Venezuela. Because these countries carry additional political, economic and currency risks, investors in emerging markets should accept volatile returns. There is potential to make large profit at the risk of large losses.