Posts Tagged ‘Anthony Bolton’


Anthony Bolton was an investment star. When he turned to China, the investment community waited with bated breath. They are still waiting, and now Mr Bolton has announced his planned retirement.

If you had invested £100 into Anthony Bolton’s UK Special Situations fund, and left it there for 28 years, it would have been worth £15,220. Not a bad return.

No wonder Mr Bolton was heralded as the UK’s answer to Warren Buffett.

And when the great man turned his considerable ability to mastering China, investors flocked to his cause.

That was in April 2010. Alas, shares in The Fidelity China Special Situations Fund run by the investment star, have fallen 17 per cent or so since then. Not a good return.

In fairness to Bolton the CSI 300 – that’s the stock market index tracking Chinese shares that investors pay the most attention to – has fallen from 3,345 in April 2010 to 2,403 at the time of writing, so it is hard to make money at such times.

Maybe the investment approach adopted by Mr Bolton in the UK for all those years just does not work in China.

Maybe, it’s just a matter of timing. The Bolton investment strategy is quite risky, and high risk means high volatility. At certain times investors in his funds lost money, but if they stayed true, in time they did very well indeed. Maybe the same could have been said for Bolton’s China’s fund, it is just that right now is a not a good moment to make a judgement.

Maybe the problem was that Mr Bolton just doesn’t know China well enough.

The man set to take over at the Fidelity China Special Situations is Dale Nicholls. He has managed the Fidelity Funds Pacific Fund since September 2003 and over that period he has returned 154 per cent. So that’s not bad, either. Fidelity says: “Dale is a bottom-up stock picker with a growth bias and a significant tilt towards smaller and mid-cap companies.”

Maybe though the problem for Anthony Bolton – and this may apply to his successor too – is straightforward regression to the mean.

If an investment delivers a one-hundred-fold return, we can be fooled into thinking we had more influence than actually we did. Should we repeat our efforts many times, regression to the mean may mean that our average performance is more mediocre. A sportsman, or pop star, or serial entrepreneur may enjoy a run of success, but the more often they try to repeat their success, the more likely regression to the mean will occur.

Leonard Mlodinow of the California Institute of Technology used the metaphor “The Drunkard’s Walk” in his book of that name to explain the idea. He tells the story of Sherry Lansing, top brass at Paramount, who commissioned ‘Forrest Gump’, ‘Braveheart’ and ‘Titanic’. She was a “genius”, who then “lost her touch”. She was fired, following one flop after another.

In the year or so after her departure, the studio enjoyed a run of hits. So, its decision to fire Lansing was proven right, or so it appeared. However, films such as ‘War of the Worlds’ and ‘The Longest Yard’ had already begun under Lansing’s tenure. Mlodinow also quotes a Hollywood executive who reportedly said: “If I had said yes to all the projects I turned down, and no to all the other ones I took, it would have worked out about the same.”

© Investment & Business News 2013