Anthony Bolton's Fidelity China Special Situations investment trust has jumped up the performance charts after a stellar year which saw it return three times its benchmark index.
Following a surge in returns in the last six months - which saw the trust's NAV climb 10.9% and the share price rise 6.3%, versus the MSCI China index loss of 1.9% - the trust has trebled gains made by the index over the last year.
The latest report from the trust revealed a total return in NAV terms of 36.8% in the last year, with shares up 35%. This compares to the index return of 12.4%.
The stellar performance means the trust - which has come in for criticism from a number of commentators - has delivered 10.1% in NAV terms since launch, versus a 0.6% loss for the index, though shares in the trust are down 1% since launch.
Bolton, (pictured) who is retiring next April and handing over China Special Situations to Dale Nicholls, said the better performance highlighted in the annual report had continued into the first half of the current year, with investments in the US and small and medium sized companies all contributing.
"The results have been helped in particular by the good performance of Chinese internet companies and US-listed Chinese companies. In the interim report a year ago I mentioned that I had materially increased the portfolio's exposure to these names and I am delighted that this has paid off," he said.
"Another trend that has helped the portfolio has been the increase in the breadth of the market's performance, with many medium and smaller companies' shares outperforming. It is good to see the factors that hindered performance in the past, the exposure to smaller private companies and the portfolio's borrowings, are now working to shareholders' advantage."
While the £635m trust has seen a big turnround in performance, Bolton said valuations in China remain well below their long-term average, and as such he remains optimistic for the region.
"Although sentiment has recovered somewhat, investors, particularly on the mainland, remain cautious," he said.
"Emerging markets and China remain out of favour, and indeed the Chinese market has been one of the worst performing world markets over the last three years or so."
He said valuations, coupled with a potential trend among Chinese investors to buy medium and small-sized companies listed in Hong Kong, meant there were still many opportunities for investors.
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