Anthony Bolton, the famed president of investments at Fidelity International, will move to Hong Kong early next year to run a new portfolio investing in China and China-related opportunities. He plans to launch the portfolio around the end of March.
Announcing his return to fund management -- after a near two-year break -- in Hong Kong yesterday, Bolton said: "I firmly believe that China is the investment opportunity of the next decade." He has been a regular visitor to and investor in the country since 2004.
"The relative attraction of emerging markets will continue to overshadow the demand to invest in developed markets," said Bolton, adding that: "Western governments have effectively mortgaged the future."
He likened the situation today in China to the rapid growth seen in Taiwan or South Korea some 20 years ago, but on an even bigger scale.
"China today is valued fairly rather than expensively in my view," Bolton added. He supported his assertion with slides showing China's low levels of household debt, low consumer spending levels, high upside potential for auto penetration and much improved affordability of goods.
He also cited China's low loan/deposit ratio of 67% as a positive indicator. Not surprisingly, that figure is significantly below that in the US (107%) and the UK (123%), but it is also an improvement on India (82%) and Indonesia (71%).
Bolton is best known for running Fidelity's UK-registered Special Situations Fund, which he managed from its launch in December 1979 until the end of 2007. In that time, the fund posted an annualised return of 19.5% (compared to 13.5% for the FTSE All-Share Index).
He says he aims to bring his Special Situations investment approach to Chinese stocks in the new fund, noting that he invested up to 5% of his UK fund into Chinese stocks. Further details of the new China portfolio will be announced in the first quarter of 2010.
Bolton's announcement will come as a boost to Fidelity in the region, following the departures of Asia-Pacific managing director Chris Ryan in October and Asia-Pacific chief executive Brett Goodin in May.
An intriguing aside is the speculation that Ryan had been frustrated over Fidelity's refusal to allow him to found a domestic joint-venture fund company in China. The asset manager has long made clear it is not interested in a Chinese JV, particularly one in which it doesn't have control. Ryan never pitched a JV, although he did try to come up with other structures to access Chinese investors. It was also he who hired Zhan Long as country head in China in May last year.
Fidelity already runs three China funds: the $4.08 billion China Focus Fund, managed by Martha Wang; the $366 million Greater China fund run by Wilson Wong; and the China opportunities portfolio, which launched this month, also run by Wong. The China Focus Fund has gained 65% this year as of November 20, compared with a 61% gain in its benchmark, the MSCI China Index.