Bolton’s legacy: The successes, the mistakes and the overall returns

Fidelity’s legendary fund manager Anthony Bolton has announced he is to retire next April, bringing to a close a 35-year career managing money at the group, but what legacy does he leave behind?

For those with short memories, Bolton’s last few years have been characterised by his performance in China.

Always an extremely bold gamble, it is one that has not played out particularly well for Bolton (pictured) as yet, although he still has ten months to get the numbers back up.

Returns on his China Special Situations investment trust – a small- and mid-cap focused fund – have lagged the benchmark since launch, amid slowing growth in the region.

The trust itself is down 12.3% in terms of its share price, well below the only comparable trust – the J.P. Morgan Chinese investment trust – which is flat.

The wider MSCI China index is down 5.9%, while the more relevant MSCI China Small Cap index is down 12.6%. The mid-cap space, where Bolton also had a decent chunk of his trust, is down a huge 23.5%.

So while it has lagged the wider Chinese market, it has actually done what investors holding it should have expected – deliver performance in line with the Chinese mid- and small-cap markets. After all, his trust only had around a third in large caps, with the remainder in smaller-sized businesses where he saw the best opportunities.

Any manager, no matter what reputation they have built up, is always beholden to the market in which they invest, and Bolton has been no exception.

Although perhaps a victim of timing, ultimately Bolton cannot be judged a failure for delivering performance in line with the mid- and small-cap stocks to which his trust was predominantly exposed.

The more important point here is that judging any manager over a short space of time is foolhardy.

Bolton made his name running the Special Situations fund for a staggering 28 years. During this time, he delivered an annual return of 19.5%, compared to 13.5% for the FTSE All Share. This kind of return placed him in the upper echelons of fund management, and earned him his reputation over many years.

In pounds and pence, if you invested £10,000 in his fund in 1979 and held the fund throughout his tenure, it would have turned into £1,432,000 by the time he retired in 2007.

Since his return in 2008 it has been a different story, but to fixate on a fund which is still in its infancy seems unfair. Bolton has only been running China Special Situations for just three years and two months, and the trust could still  come back strongly if the Chinese stock market actually starts to move higher.

You could also question the wisdom of the high gearing of the trust, given the volatile nature of the stocks Bolton was buying, but that itself is more of an issue for the trust’s board.

Some of the shine has been rubbed off Bolton’s reputation by his Chinese experience. The shame of it all is that, unless the trust does rebound in the next ten months, many investors will only remember the bad and forget the many years of good returns they enjoyed during his tenure.

But for those with longer memories, Bolton’s name will always be remembered more fondly. Yes, there have been mistakes, and yes, the China trust is yet to come good, but Bolton’s legacy remains intact.


This article was first published on Investment Week

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