On a trip from Hong Kong to the Chinese city of Shenzhen Fidelity’s Anthony Bolton was in a reflective mood as his fund management career drew to a close.
Citywire was offered a unique insight as to why he put his reputation on the line to come out of retirement and run a Chinese-focused closed ended fund for Fidelity as a guest of the group on a trip to the region. In April of next year Bolton will hand over management of the trust to Citywire A-rated Dale Nicholls.
Aged 63, Bolton was persuaded in 2010 to launch the China Special Situations Trust, which focused on the same kind of small and medium-sized companies he had built his reputation on as manager of the Fidelity UK Special Situations fund, which he ran for 28 years.
His career spans 37 years in fund management at Schlesinger Investment Management Services, preceded by five years working as an analyst at Keyser Ullman. He has spent 34 years as a fund manager at Fidelity after joining in 1979.
His decision to launch the China fund was met with plenty of scepticism. As our coach made its way through the imposing purpose built tower blocks of Shenzhen, the special economic zone which was the epicentre of China’s capitalist experiment in the 1980s, Bolton showed no regrets on his gamble.
These critics became increasingly vocal as the trust struggled to deliver the goods and while it was tough for Bolton to take, he accepted it came with the territory. ‘I’ve had good and bad times before as a UK manager and the 80s were particularly tough,’ he said. ‘When I said I was going to launch a China fund a lot of people said “why are you doing this, you will simply spoil your track record”. But I think if I hadn’t done it I would have regretted it, it has been the most interesting thing I’ve done in my career.’
Bolton showed plenty of enthusiasm for his job as we made our way to the headquarters of one of his holdings. The firm in question, Tencent, provided evidence of mind-boggling numbers in China with an infographic proudly displaying the fact it had 160 million users on its instant messaging service as we arrived at its offices at 11am.
Yet Bolton feels now is the time to retire. ‘Yes I will miss this job, I love this job. However, it has become increasingly intense, you can’t turn off and it has come to the stage in my life where I want to do other things. As a Chinese small cap manager you have to be batting every day, you have to see companies and constantly digest information. I am ready to retire.’
Bolton says one of the most important lessons he has learnt in his career is to keep his cool. ‘Personality is important in this business and while I’m a calm person very occasionally I can get worked up. It is easy to get over-confident or over-depressed by allowing good and bad stock investments go to your head. You need to have a stable personality and a healthy degree of cynicism but not be so ultra-cynical it stops you doing anything.’
The last set of results from Bolton showed after a tough few years things were finally starting to turn for him, with the trust’s net asset value returning 10.9% in the six months to 30 September versus a 1.9% loss in the MSCI China index.
With the excitement around the wide-ranging reforms of last week’s Third Plenum and the pick-up in performance, Bolton does not show remorse at the prospect of retiring just when his fortunes seem to be getting better. ‘The most important thing is to pass on a good legacy to Dale Nicholls. I still have and will keep a big holding in the fund. If Dale has his day in the sun I won’t be terribly upset.’
Bolton believes the Third Plenum opens up a whole range of opportunities in China. ‘People whose judgment I value say it’s the most important piece of economic data of the last three years.
Ultimately Bolton, who will use his retirement to travel and compose music, which he hopes to be played at a charity event at the Hong Kong Philharmonic before the year is out feels very privileged to have worked in fund management.
‘I’m incredibly lucky as I had no idea what I wanted to do when I left university. Fund management is a most fascinating business and you get to meet fantastic entrepreneurs. It’s been a privilege to have such an interesting career.’
The writer was a guest of Fidelity on a trip to Hong Kong and China