Anthony Bolton the UK's Answer to Warren Buffett

Just a few days after Anthony Bolton's 60th birthday he prepares for the imminent 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 will he be able to find value in what has become a rather popular and expensive stock market?

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 after launch causing it to drop in value immediately, hence the point that this is a long-term investment, although it could trade at a premium and make you lots of cash straight away, but who knows?

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.