Star fund manager Anthony Bolton to step down
Dale Nicholls has been announced as Anthony Bolton's successor as manager of the Fidelity China Special Situations investment trust (FCSS).
Shareholders have been expecting an announcement of this kind since Bolton revealed he intends to retire in April 2014.
Fidelity says that the new appointment "reflects the wish of the board to continue with the current investment approach and strategy". Nicholls has 17 years' experience in the industry and has managed the Fidelity Funds Pacific Fund since September 2003, outperforming the index over that period with a return of 154% against an index return of 117%. The fund is top decile in its peer group.
John Owen, chairman of the FCSS board, says stepping into Bolton's shoes will be a "significant challenge". He adds: "We are delighted to have appointed a portfolio manager with a demonstrable record of success investing in the Asia Pacific region and specifically within China."
Mark Dampier, head of research at Hargreaves Lansdown, says the handover looks as though it will be well-organised. "We see little reason [for investors] to sell, particularly given present low valuations in the stock market, and we think that China is a long-term growth story."
Dampier points out that it is widely acknowledged the trust has had a difficult time, and that it is now trading on a discount of more than 10%. He adds, however, that it remains focused on sectors such as the internet and the domestic consumer, which are areas the Chinese government wishes to encourage (a trend reflected by the country's retail sales figures continuing to grow by over 10% a year).
No reason to panic
Jackie Beard, director of closed-end fund research at Morningstar, says the clarification is welcome news to investors. "We see no reason for existing investors to panic as this is merely confirmation of what we knew was on the horizon. We have placed our rating under review pending our meeting with the incoming manager," she says.
Beard adds that with the fund's performance this year "markedly better' than it was for Bolton's first two years managing the fund, the timing of his departure is no surprise. "Bolton wanted a good end to a long and successful career," she says.
Bolton has run the China Special Situations fund since April 2010 and originally only planned to do so until 2012; he announced the extension of his management at last year's AGM.
The fund managers will work more closely from the beginning of 2014, and from that time no new purchases will be made without Nicholls' approval.
This article was written for our sister website Money Observer
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.
Every limited company must hold an annual general meeting for its shareholders once a year to consider the company’s accounts, reports of directors and auditors and it is the only opportunity for shareholders to express their feelings to the board of directors. Shareholders also vote on the appointment/re-appointment of directors, although this may be sent to shareholders as a postal ballot.