Fidelity China Special Sits put on review as industry reacts to Bolton retirement

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Morningstar has placed the Fidelity China Special Situations investment trust under review, as the industry reacts to the news that manager Anthony Bolton will retire next year.

Earlier today, Fidelity announced that Bolton will retire in April 2014 and named Dale Nicholls, manager of the Fidelity Funds Pacific fund, as his successor.

Morningstar director of closed-end fund research Jackie Beard says: “The news that Anthony Bolton has confirmed his intention to step down from fund management in April 2014 has not come as a surprise. The fund’s performance this year has been markedly better than the first two years and Bolton wanted a good end to a long and successful career.

“We welcome the clarity that investors now have regarding the fund’s future management. Dale Nicholls is a long-standing Fidelity employee who has a bent towards smaller companies. He uses the same analytical resources that Bolton himself draws upon and he has been running funds for Fidelity in the Asian region for almost a decade.”

Beard adds that there is “no reason” for investors in the trust to panic over the confirmation that Bolton is to step down. She also says Morningstar will meet with Nicholls next month, after which it will take another look at the rating.

Rowan Dartington head of collectives research Tim Cockerill says: “Anthony Bolton’s plans to retire in April next year should not come as a big surprise; it had been a planned from the launch of China Special Sits that his tenure would be quite short.

“As with all Fidelity handovers, they have tried to find a manager with a very similar style, and this certainly appears to be the case on paper. Whilst Dale Nicholls has not managed a pure Chinese fund before, he has greater regional experience than Bolton which will be an advantage. And of course, the two managers will work together for some time before his retirement so next April should bring little actual change.”

The Fidelity China Special Situations trust has suffered a difficult time since its launch in 2010, going through a period of sustained underperformance. The trust is currently on a discount of over 10 per cent, reflecting the turbulence that has recently struck emerging markets such as China.

Hargreaves Lansdown head of research Mark Dampier says: “Anthony has had a fantastic career; he is rightly regarded as one of the best active managers of recent decades. His China fund’s performance in recent years has tarnished this record slightly, though it has shown signs of recovery in the past year.”