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Bolton’s China trust is worth a small punt

Anthony Bolton

Over the course of today’s celebration of all things Anthony Bolton, or more specifically his Special Situations China Trust, we’ve looked at:

Now it’s time to give my own personal verdict!

I’ll also point you to some more resources to help you make your own mind up.

Update 16/2/10: Since writing this article, a trusted reader has advised that the initial charge will be 1.5% and there’ll be annual trail charge of 0.5% paid to brokers. Minimum subscription will be £2,500. This is not a cheap trust and that’s more than I want to punt on it. I likely won’t invest at launch now.

I’ll be investing in China with Bolton (a bit)

I like investment trusts, I like emerging markets for the long term, and I like Anthony Bolton – what he says and writes, as well as his track record.

Also, I don’t like the idea of missing out!

However, I won’t be putting more than a small amount of money into Bolton’s fund – perhaps just £1,000, depending on the initial subscription limits.

Logically, I can’t believe that lightning can strike twice and he can trounce the markets again.

But my heart says what the heck!

If Bolton does repeat his glory days I’ll have £140,000 to show for my £1,000 investment in 28 years, and if he doesn’t, I don’t think he’ll do worse than a Chinese index tracker. The country must be the least suited market to passive investing in the world.

The offer period for the China Special Situations Investment Trust opens on February 26th and closes April 5th. I think it’s likely to trade at a premium once it’s listed, which is planned to start April 19th.

Further reading on Bolton’s new trust:

Readers: If you’re a UK investor, do you plan to back Bolton with your own money? Please share your thoughts in the comments below.

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{ 25 comments… add one and remember nothing here is personal advice }
  • 1 Mike Piper February 11, 2010, 7:07 pm

    “Also, I don’t like the idea of missing out!”

    Hehe. Any other readers not surprised? 😀
    .-= Mike Piper on: Index Funds vs. Active Mutual Funds =-.

  • 2 The Investor February 11, 2010, 8:51 pm

    @Mike – Hah, yes. I always feel I’m slightly confessing through a grill to Father Oblivious Investor with these articles. 😉

    Remember kids, active investing nearly always sucks versus passive – fact.

    But as Mickey Rourke supposedly said once, according to Joe Queenan – sometimes you’ve got to roll the potato. No, I don’t know what he meant either!

  • 3 Mickey February 11, 2010, 11:23 pm

    It will be interesting to track this against the First State Greater China, Fidelity SE Asia and perhaps a couple of other ‘China’ funds such as Jupiter China. I invested in the return of Bill Mott and got bitten, as Bolton is back for just 3 years then his long term record may not be that relevant, his short term record is probably more relevant and that in itself had periods of low returns. I’m 50/50 at the moment but would probably rather stay with the First State or Fidelity SE funds.

  • 4 Lemondy February 11, 2010, 11:56 pm

    I suppose I might buy this at a time when:

    a) it trades at a reasonable discount to NAV 😛
    b) it has a bit of a track record
    c) I know what the charges are going to be, e.g. any performance fee?
    d) I can see exactly what kind of companies/sectors it’s buying into

    Indications are that the fund is going tilted towards smaller/mid-cap; it looks like all the existing passive China-specific funds (OK, all I could find was ETFs) are bigcap-oriented, so I can see the attraction of small-cap exposure. I’ve looked at active China unit trusts before but the charges always put me off. Only direct exposure I have in my portfolio is through IEEM. All hail iShares.

  • 5 OldPro February 12, 2010, 12:30 am

    Got to be honest, I’m not going to be able to tell one thingyme factory in shanghai town from another. Wouldn’t be any the wiser for reading the holdings – that’s why Im paying Bolton for right.?

    Track record would be good but if any good it will come at a premium – look at rothchilds RIT capital before the PE slump, it was up 10% over NAV for years.

    Bolton will probably go over NAV from launch (see my other comment) but perhaps your plan will work when the hullabaloo dies down.

  • 6 Financial Samurai February 12, 2010, 12:43 am

    Sorry, but is Bolton like the fake Warren Buffet of England?
    .-= Financial Samurai on: Someone Always Farts In A Crowd =-.

  • 7 The Investor February 12, 2010, 1:03 am

    @Sam – He’s more the fake Peter Lynch. But many UK readers don’t know Peter Lynch. We don’t really have a Buffett equivalent as far as I’m aware. Our seriously wealthy are either foreign, entrepreneurial, high finance (and entrepreneurial) or related to the Queen. Or landowners.

  • 8 Mrs. Money February 12, 2010, 2:19 am

    It’s going to be interesting to see what happens over the next few years with China and the economy here. I’m a little scared, myself. 🙂
    .-= Mrs. Money on: How Does Redbox Make Money? =-.

  • 9 Lemondy February 12, 2010, 10:29 am

    @OldPro – right, that’s why you wait until the trust (or sector) becomes unpopular and then buy at a discount. It inevitably will at some point.

  • 10 The Investor February 12, 2010, 11:33 am

    @Mrs Money — I think there’s little doubt now China has stopped following idiotic communist principles that sound great when you’re 19 but are clearly bonkers to anyone who has ever worked one day on a job (rant over!) it will continue to move up the rankings. It was always a superpower, and has been a civilisation approximately 10 times longer than the US! It’s people are naturally curious and clever, and China invented everything from gunpowder to paper, often in isolation from us.

    I think the good news is they’re not naturally very territorially aggressive, unless you happen to be on their borders. Compared to Europeans, Brits and Americans they’re positively homebodies.

  • 11 The Investor February 12, 2010, 11:36 am

    Thanks for your insights guys! IMHO, the issue with Bolton’s China trust and discount/premiums is the unpopularity is likely to come after some bubble run up, at a guess, so you’ll see a discount to what by then seems a fanciful valuation of NAV. (This is going on my central world is back to growth thesis). I guess it’s possible it could slip between him raising the money and investing it, but I’m not hopeful — I was watching a few commercial property vehicles recently that were started by veterans to take advantage of the slump, and they went above NAV and stayed there. 🙁

  • 12 The Investor February 12, 2010, 11:37 am

    @Mickey – Thanks for your thoughts. I very rarely invest in funds, so it’s good to have someone else chiming in. If you’ve got a minute, how do you find the charges on those two funds?

  • 13 David @ MBA briefs February 12, 2010, 3:03 pm

    Thanks for this post, I think emerging markets will be great investment opportunities but Chinese investments always scared me even though they’re probably the best place to make money now. If someone like Anthony Bolton was involved I’d be a lot more likely to part with some of my money. Good luck on your investment.
    .-= David @ MBA briefs on: The 5 worst Super Bowl ads of 2010 =-.

  • 14 Financial Samurai February 12, 2010, 9:37 pm

    Why is it that there seems to be a lack of famous English investors or business men? I can only think of Richard Branson…. hmmm. You guys had like a century++ head start over Americans. What happened? Just curious.
    .-= Financial Samurai on: Getting Busy This Valentine’s Weekend! (Singles Especially) =-.

  • 15 The Investor February 12, 2010, 10:16 pm

    @Sam, I think this is similar to the discussions we’ve had in the past about invention and industry. Remember, the States is 6x bigger and you’re the equivalent of the Roman Empire at the moment. You *should* be dominant. There’s also the fact that similar to how British companies sell up too soon to ever make it really big, so British investors and businessmen generally don’t get as meglomaniac as Americans. Once you have your ‘nut’ – your ten million, for your country house and the rest, you can retire to moaning about how Britain isn’t as great as it was in the old days. 😉

    I’m touched by your concern for our wet and windy rock though. 😉

  • 16 OldPro February 16, 2010, 11:12 am

    Fidelity starting to push this hard and some nuggets are trickling out in the money biz press.

    Company plans to raise $1 billion – biggest IT fund raising ever (nominal). (So equates to your £630 million Monevator, denom will be USD I s’pose)

    Minimum subscription will be £2,500 shares at £1 a pop

    Annual management charge 1.5%

    Trail commission 0.5%

    Advisers register at http://www.fidelity.co.uk/adviser or 0800-414177 with packs going out 26th Feb.

  • 17 The Investor February 16, 2010, 11:18 am

    Great info Old Pro, thanks for sharing! I’ve already updated the article above accordingly.

    As you can see, I likely won’t invest at launch now. I may if there’s a big discount to NAV but we’ll see – I don’t expect one in a hurry.

  • 18 Mickey February 17, 2010, 11:58 pm

    Hi,
    The fund charges on the Fidelity and First State funds are higher than the likely costs of holding this Investment Trust but I offset my fund fees by using a fund supermarket, not paying an initial fee plus getting around .15 or .20% of the annual fee back. A lot of the cost comparisons mistakenly count the 5% initial fee that is easily avoided. I am currently looking at a swap to ETF’s and have just read Tim Hale’s ‘Smarter Investing’ with that in mind. The book made me more aware of a few things such as lifetime goal and costs, however I have to balance the lower cost of ETF’s against the fact that my Fund Supermarket gives me .15% back each year and would charge 0.5% on ETF’s annually (max charge £200).

    I expect to move away from funds due to the total lifetime cost rather than the small difference between ETF’s + Management fee versus the TER of funds.

    With regard to the Bolton China fund, I’m going to give it a miss. Having a punt on it is no better than gambling, sites such as yours are slowly educating me to the naivety of that 🙂

    Thanks for a very useful website,
    Mickey

  • 19 The Investor February 18, 2010, 2:07 am

    @Mickey – Useful info, thanks for stopping back and updating us. I’m by no means an expert on all brokers available, but there are definitely platforms (such as self-select ISA brokers) that will let you hold ETFs for free once you’ve bought them, paying just an annual charge (say £30-40) for the account.

    From memory Selftrade for instance charges £35. (This doesn’t include any dividend reinvesting or similar, for which normal brokerage charges would apply).

    I’ll keep my eyes peeled for Tim Hale’s book.

  • 20 Chris February 26, 2010, 9:17 pm

    Probably won’t be risking more than the min. Have also bought other funds to compare, one China, one Russia.

    My fear…it is a closed investment. It is fronted by Bolton. It is therfore a marketing front to get as much cash in now. If it was an open ended investment I would go in a bit bigger and drip feed. The fact that the fund is going into small to medium caps dictates the need for the drip feed in as well. I would even have accepted an open ended fund with major penalties for exiting before Bolton retires.

    But look at the opportunity… it will attract the cash… the big buying will drive share prices up for the small caps…. the flock will feel that they have been left behind and want some of the action so it will trade at a premium. Get in …. Get out and then get back in.

    How long before the existing global goliaths are free to compete as they wish in China anyway???

    Give me a an open ended fund that enables the fund manager to flit between and short Russia and China and I am in.

  • 21 JT March 4, 2010, 5:14 pm

    There’s an ad for this trust on Barclays stockbrokers and the subscription level is £500. Think that may only apply for barclays account holders.

  • 22 The Investor March 5, 2010, 2:29 pm

    Interesting info JT, I’ll go have a snoop around their site when I get a minute!

  • 23 Kate March 9, 2010, 7:42 pm

    Just wanted to raise a point. You can invest in this fund (in IPO period) with Barclays Stockbrokers and the minimum investment is £500. You can hold in ISA, MM or SIPP…

  • 24 The Investor March 10, 2010, 12:49 am

    Thanks Kate, have now heard this from two sources (including you). Still avoiding though now, due to the performance fees that have come out since writing the article.

    Good luck if you go in! 🙂

  • 25 Greg March 27, 2010, 2:19 pm

    Some interesting points made here, I currently hold a Barclays Stockbroker accout and am very tempted to invest £500. What are the likely cost of withdrawing money and is there a minimum term.?

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