JPMorgan’s Chinese trust tipped as Bolton beater

Investment trust analysts have cautioned new investors against buying into Anthony Bolton’s £483.5m Fidelity China Special Situations investment trust.

The analysts said that existing clients should consider remaining invested, so as not to crystallise sharp losses on their investments. However, they warned against new clients being tempted to buy in following the trust’s recent declines.

Simon Elliott, head of research at Winterflood Securities, said a better closed-end fund alternative is the JPMorgan Chinese trust, which is trading at a discount of almost 10 per cent to the net asset value of its investments. “However, the [Fidelity] portfolio set up is quite bullish and when the market turns we would expect performance to turn,” he added.

Ewan Lovett-Turner, associate director of investment trust research at Numis Securities, also recommended the JPMorgan Chinese trust, which is managed by Shumin Huang, William Tong, Howard Wang and Emerson Yee Shun Tip. Its shares have returned a total of 244 per cent over the past 10 years.

The board of the Fidelity trust last week reported further significant underperformance, in the trust’s second annual results, including share price falls of 26.4 per cent in the year to the end of March. This compares unfavourably with the trust’s benchmark, the MSCI China index, which fell by just 6 per cent over the same period. The trust’s chairman John Owen admitted the performance was “disappointing” for shareholders.

Mr Bolton has said his trust has a high exposure to more volatile medium and smaller companies, which in the past 18 months have delivered a “disappointing” performance. However, the trust is benchmarked to MSCI China – a predominantly large-cap index. Compared with the MSCI Smid Cap index it would have outperformed, with the index losing 29.8 per cent and the trust losing 27 per cent from its point of launch to date, according to FE.