Bolton's five China challenges and four top stocks

Speaking to investors today following the six-month results of his Fidelity China Special Situations trust, Anthony Bolton explained why the trust has struggled, with net asset value falling 29% over the six months to 30 September.

“I make no excuses but to say it has been very disappointing, especially the three months to the half-year end,” he said. The manager blamed the trust’s exposure to volatile small caps, as well as its level of gearing, for the underperformance. “As the market goes down, gearing goes up. We went from gearing in the high 20s down to the low 20s, and intend to keep it near to where it is today, at 24.4%.” The gearing is split across $100m of bank debt and $100m of credit default swaps, Bolton added. He recently removed a put option he had had on Korea as insurance against the possibility...