China equity fund hailed as most succesful of the last 20 years

News - Funds

Written by Jade Stewart

Monday, 12 April 2010 10:00

Fidelity China Special Situations is set to be the largest China equity fund listed in the UK market with the initial public offering raising £460 million, one of the most successful of the last 20 years, it is claimed.

The success of this fund raising demonstrates great confidence in China as an emerging investment market, according to Fidelity International. It is headed by Anthony Bolton, one of the most successful investors of his generation, and likely to list on April 19.

‘I am extremely pleased with the amount of money raised through the initial public offering. It clearly demonstrates that investors view the combination of Anthony Bolton and the growth potential of China as a winning combination. We look forward to delivering on that expectation,’ said John Owen, Chairman of Fidelity China Special Situations.

Bolton believes that China is the investment opportunity of the next decade. ‘I’m absolutely delighted with the support from investors and advisers in the UK market. Fidelity China Special Situations will be the largest Emerging Markets equity fund new issue since 1990 as well as the largest China equity fund listed in the UK which is a fantastic achievement,’ he explained.

Bolton is best known for his stewardship of the Fidelity Special Situations Fund, which he managed from its launch in December 1979 until the end of 2007. Over this 28 year period, the fund achieved an annualised return of 19.5% compared to 13.5% for the FTSE All-Share Index. During his tenure, £10,000 invested in the fund at launch grew in value to £1,432,000.

Fidelity opened its Hong Kong office in 1981 and set up a representative office in China in 2004, now located in Beijing. The company has more than 16 years’ experience of investing in China.

While many of the company’s Asian and global equity funds have Chinese market exposure, the company has a team of over 40 investment professionals in Hong Kong, from where it currently manages in excess of US$30 billion in equities.

However, some experts point out that is has fallen short of its original fund raising target of £650 million. ‘The sum of £460 million does miss the total target of £650 million set out in the prospectus but considering the nature of the fund and the fact that this has been launched 12 months after one of the biggest bear markets in history, it should be viewed as a success for Fidelity,’ said Adrian Lowcock senior investment adviser at Bestinvest.

‘It is now up to Anthony Bolton and his team to deliver for the thousands of individual shareholders who have backed him,’ he added.

Some financial advisers have criticised Fidelity for high charges on the trust. The management fee is 1.5% and there will also be a 15% performance fee when the trust returns more than 2% above the returns made by benchmark MSCI China.