'Despite their poor relative performance I still believe that the exposure to smaller private companies rather than the state owned large enterprises will prove to be more rewarding in the longer term,' he said.
Bolton said his investment strategy remained unchanged, yet he has been building up exposure in the internet space. He recently rebuilt his position in Tencent, added a 2.1% position in Baidu, and a smaller position in unlisted company Alibaba Group.
Shares in the investment trust fell 9.5% over the six months to 30 September, and the net asset value (NAV) per share was down 6.2%.
The investment trust underperformed the MSCI China Index, which was down 2.1% over the period.
The drop was announced in the fund’s semi-annual results. The fund has struggled to gain traction since its launch at 100p two years ago. The NAV calculated by the company was 78.73p as of 30 September.
The shares are currently trading at around 77p.
The fund’s bank loans increased from 23.8% as of 31 March to 26.1% as of 30 September.
The fund has fully drawn down on its £95 million loan from February this year, but continues to use derivatives for further gearing, totalling a further £41.8 million.
The fund's largest holdings are Ping An Insurance, Tencent Holdings Limited, a software development company, and China Unicom Limited.
Bolton (pictured) said the last six months to 30 September had continued to disappoint, with the main cause being the combination of China’s slowdown, the fund’s gearing and its high exposure to medium and smaller sized companies.
‘Encouragingly the markets and the company have performed better in October,’ he said.