Stick with China, says Bolton, as his investors lose 20 per cent in first half

The veteran investor Anthony Bolton claimed yesterday that the case for investing in China was as strong as ever, despite the fact that the value of the fund he manages has slipped by a fifth since the start of the year, and is languishing below its net asset value.

The Fidelity China Special Situations investment trust, which is listed on the FTSE 250, has lost 20.5 per cent of its value in 2011. Meanwhile, its benchmark index – the MSCI China – has fallen just 4 per cent. Mr Bolton, who came out of retirement and moved to Hong Kong last year to run the fund, said: "Like any investment proposition, China is not without risks but I continue to believe that the case for investing is compelling." The fund – which raised £460m when it launched on the stock market in April last year – published its annual results yesterday.

They revealed that, to the end of March, the share price actually climbed by 10 per cent while the fund's net asset value increased by 5.24 per cent from 99.01p to 104.2p. That was higher than the 3.3 per cent rise recorded by its MSCI China benchmark, but that was before the recent slump. "The performance since the period end has been disappointing for investors and me personally," Mr Bolton admitted, blaming the poor performance in part on the fund's "low oil exposure".

But he has many fans in the investment industry and they were quick to back him to turn the fund around. Mark Dampier, of Hargreaves Lansdown, said: "China has been out of favour with rising inflation and interest rates. When this ends, probably later in the year, it may be time to buy."

Brian Dennehy, of Dennehy, Weller & Co, said: "The China fund is actually looking good value at current levels. But China will continue being volatile and it could take some time to gather some momentum, so I would only build exposure through monthly savings."