David Prosser: Bolton picks China for his comeback
Wednesday 10 February 2010
Outlook The best fund managers have star quality, transcending the mundane industry in which they work and attracting fan bases that follow their every move – they also, like rock stars and sporting heroes, have a habit of reneging on plans for retirement, coming back for that one big final tour.
So it is that Anthony Bolton, the Fidelity Investments stalwart – and the best retail fund manager in Britain over the past three decades – is back. Having stepped down from day-to-day fund management in 2007, Mr Bolton yesterday formally unveiled the vehicle with which he is returning to the fray, a Fidelity investment fund that will offer the UK public exposure to China.
Fidelity knows the fund will be popular. It is launching it in the form of a closed-end investment trust worth £630m, having seen its open-ended Special Situations unit trust grow into an unwieldy multibillion-pound vehicle as investors flocked to Mr Bolton's previous venture.
Even leaving aside the identity of the fund manager, one can appreciate why there will be a healthy appetite for this launch. China's economic potential clearly is phenomenal. And Mr Bolton argues now is the moment to get in on that potential – that China is at a moment in history seen previously in now-developed markets in the Far East, where GDP per head reaches a critical mass that of itself acts as an economic accelerator.
In his previous endeavours, Mr Bolton's trick – much like Warren Buffett – has been to spot such moments and to find the stocks that provide the ideal play on the themes identified. There is no reason to think these skills have deserted him during three years out of the action.
And yet there are considerable risks. Mr Bolton himself admits to having concerns that China may be on the verge of an asset-price bubble. Nor is he infallible – two years ago, he called the bottom of the decline of Western stock markets too early on two occasions. Anxious fund analysts also point out that while Mr Bolton is now relocating to Hong Kong, he has no experience of investing in China.
Conventional wisdom is, in any case, that even those investors with the long-term mindset needed for stock market investment – think five to 10 years or more – should predominantly stick to domestic equities. Investing overseas, particularly in developing economies, brings a whole new set of risks.
This is not the place to dispense investment advice – whether or not to back Mr Bolton should be a personal choice. At the very least, however, this is another indication that China is fast becoming the dominant economy of our time. Mr Bolton is done with investing in the US, let alone the UK – with this farewell, sell-out tour, he has bigger ambitions.
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