Anthony Bolton Investment Guru
Anthony Bolton: Investment Guru (The UK's Warren Buffett)
Anthony Bolton is probably the UK's most famous and successful investor. He managed the Fidelity Special Situations Fund (now split into two funds and managed by Jorma Korhonen and Sanjeev Shah) and the similar Fidelity Special Values Investment Trust from 1979 to 2007 (initially managed by Sanjeev Shah who was replaced by Alex Wright in 2012). The Fidelity Special Situations Fund managed a growth of nearly 20% per year over 28 years, under the management of Anthony Bolton, but since the split and change of manager the new smaller fund, it's sibling, the Fidelity Global Special Situations Fund, nor the Special Values IT, have performed as well.
Anthony Bolton still works at Fidelity as the President of Investments and has just returned to investment management in China with an all new investment fund taking advantage of the huge growth potential in the region: China Special Situations is a new investment trust which began trading on April 19, 2010 and is eligible for ISA investment. By November 2010 the fund was up 27% partly due to trading at a large premium to NAV and as a consequence a rights issue has been proposed (new shares issued to bring down the premium) but has subsequently suffered poor performance. See more about this below...
Anthony Bolton, Investment Guru
In addition to the highly successful Fidelity Special Situation and Special Values funds Anthony Bolton also managed other funds during his career, including: Fidelity European Growth Fund and Fidelity European Values Investment Trust. Fidelity Special Situation became the largest open ended investment fund (OEIC) and has now been split into two funds to make it more manageable: The UK and Global Special Situations funds. Anthony Bolton also manages the new China Special Situations investment trust
Anthony Bolton read Engineering and Business Studies at Cambridge University, before starting work in The City.
Anthony Bolton Books
Anthony Bolton hasn't written many books, but it is useful to get some insight into his incredible success as a fund manager.
Investment and Finance Books
Investment and Finance Books
Fidelity China Special Situations Fund (FCSS)
Anthony Bolton Has Come Out of Retirement
Just a few days after Anthony Bolton's 60th birthday he prepared for the launch of his new China Special Situations investment trust; a much hyped new fund that will use his famous value investing skills to pick companies in China that will outperform in the rapidly expanding Chinese economy. But would he be able to find value in what has become a rather popular and expensive stock market?
I was skeptical about the fund, especially as it has such high charges (for an investment trust) but just 9 months after launch in March 2010, the Fidelity China Special Situations (LSE: FCSS) investment trust was up over 27%. This was partly because the fund was so popular it trades at a large premium to Net Asset Value (NAV) - Investment Trusts usually trade at a discount. As a consequence in November 2010 Fidelity have announced an intention to issue more shares (subject to investor approval) A "rights issue". This will reduce the premium and the price for existing share-holders, but they may also be given an attractive deal on newly issued shares.
I still hold investments in China, although I tend to buy and sell as the market gyrates. In most markets I try to buy individual shares, rather than funds, so I'm more in control, but with China, Asia and other Emerging Markets in general, I feel I don't know enough about the companies to do that, so I have mostly relied on investment trusts, other managed funds or ETFs. Most of my Asian and Emerging markets investments have performed extremely well over the last few years and I have taken some profits as the market peaked, then got back in again later. These markets are very volatile and have a tendency to come crashing down again after a strong rally.
The China investment story is a very compelling one with fast growth and their economy to soon become the biggest in the world, but a lot of that story is already know by enough people to make the shares quite expensive i.e. a bit like the situation before the dot-com collapse, although of course there could be a lot more growth before anything like that happens, it's just that China is not cheap. Japan however benefits from China's growth and yet Japan is cheap because it has been such an awful investment for so long (I'm not necessarily saying Japan will go up and China will go down, I'm just getting a bit nervous about how well China has performed, to put much more money in at the moment - I did however buy into Japan, which might of course continue being an awful investment)
The main reason for being cautious about some managed funds is they do charge a lot and the only people who are getting rich are the fund-managers and financial advisors but investment trusts are usually much cheaper than unit trusts and don't pay huge commission to the financial advisors. ETFs are even better (although they are not managed by anyone so could be riskier unless you are good at timing the market) The new Fidelity China Special Situations fund is an investment trust, but it does, rather unusually, pay a commission to advisors and does a lot of advertising, all paid for out of the initial costs of setting up the trust, which is a bit naughty (and explains why so many people are being advised to buy it) There is also a hedge-fund style performance fee and a high management charge which will eat into the profits.
Anthony Bolton however is perhaps my favourite fund-manager who uses a value-based approach to choose shares. He retired from active fund-managing a couple of years ago to write music (and also to advise the new fund managers at Fidelity) but has been tempted back out of retirement to run this huge fund. He knows a lot about western markets and about contrarian value-based approach to stock-picking. He was perhaps the most successful fund manager over the last 25 years or so, but does he know all about China? China is very popular with retail investors at the moment so Fidelity (and Mr Bolton) will make a lot of money out of this new fund launch whether the fund does well or not. As an investment trust it may trade at a discount to its net asset value (NAV) causing it to drop in value, hence the point that this is a long-term investment, although it could trade at a premium as it currently is.
So after all that long rambling essay. Would I buy this investment trust? Given that I still have more than enough exposure the China, I am feeling nervous after the recent strong performance and I find the fee structure of the company a little too generous to some already ridiculously over-paid people, probably not, but if I had no exposure to China I would certainly consider it. Anthony Bolton is a very clever chap, but China is a bit of a gamble. It may do really well, but it could be a long term bet. Definitely don't put all of your eggs in one basket.
Update (January 2012): I was correct to be skeptical about Fidelity China Special Situations Fund (FCSS) and about China in general. The share price rallied at first, but this was almost entirely due to the shares trading at a premium to their net asset value (NAV) and the huge amount of media hype about the fund. Extra shares were issued due to the demand, then as the Chinese markets cooled off, from their rampant growth of recent years the FCSS share price plunged to 25% or more below the launch price and more than 40% down from the peak. This investment trust may be a good investment in future, but still trades at a slight premium to NAV and Anthony Bolton won't stay out of retirement for ever.
Update (April 2012):Anthony Bolton confirmed that he will continue to manage the Fidelity China Special Situations trust until at least 2014. He had initially said that he will run the fund to at least 2013. During 2011 the trust fell by about 30% and by around 20pc since it was launched two years ago. My initial worries about China, Anthony Bolton and this fund in general have been proved correct, but Bolton's deciding to stay on seems like good news and I shall keep watching. At some point this could be a good way to take advantage of any recovery in China... eventually.
Unit Trust and Investment Trust Books
Fidelity Special Situations Unit Trust and Special Values Investment Trust
Sanjeev Shah and Alex Wright replacement fund managers
Under Anthony Bolton's management the Fidelity Special Situations Unit Trust was the most successful fund in the UK: seeking out undervalued shares, unloved by other investors and hence priced lower than they deserve to be. The same techniques were employed by Bolton's replacement, Sanjeev Shah, who failed to perform as well, possibly partly due to market conditions.
Fidelity Special Values is a smaller investment trust, with lower charges and hence better performance potential. It however also failed to perform well under Sanjeev Shah's management and in July 2012 Shah stepped down to concentrate just on the Special Situations unit trust. He was replaced by Alex Wright the manager of Fidelity UK Smaller Companies Unit Trust, AAA rated by CityWire and ranked number one (out of 46)