Anthony Bolton, manager of the Fidelity China Special Situations trust, has admitted that the vehicle is not where it is supposed to be around two years after its blockbuster launch.
At its launch in April 2010, Bolton's £516 million closed-end fund pulled in a whopping £460 million in assets, making it the largest launch of the year.
However, since rolling out to market, the vehicle, one of the few to focus solely on China, has struggled to deliver for investors. It has lost Bolton (pictured) around £1 million of his own money and according to its latest report has shed 18.5% of its net asset value (NAV) over the 12 months to the end of March.
'It is just over two years since the launch of Fidelity China Special Situations and I admit I am not where I had hoped to be,' Bolton said, as his board told investors that the trust's yearly results had fallen 6% short of its MSCI China benchmark.
Bolton's vehicle has suffered because of its use of gearing, as well as from a relatively high level of exposure to more volatile medium and smaller companies which for the past 18 months have been stuck in an environment where they have disappointed.
But the manager, who has also been caught out by some reverse mergers, told shareholders that he continued to believe his performance would turn around.
'I must stress that if I did not believe my strategy could outperform the broader MSCI China Index in the medium to long term, I would not be pursuing it,' Bolton said, adding he that would continue to back consumption and service sectors as well as private medium and small businesses and buy into companies valued cheaply versus their potential.
He also said that despite consensus for most of last year, he continued to sit in the 'soft landing' camp when it comes to China growth.
Fidelity China Special Situations currently trades at 73.5p per share and at a discount to NAV of 6.4%.