Page 34 - DIY Investor Magazine - Issue 25

THE CURSE OF THE STAR MANAGER, PART 489
FCSS traded at a premium for its first year after launch, thanks to the appeal of star manager Anthony Bolton, following his success as manager of the UK-focused Fidelity Special Situations.
It was big news, raising £460m when it floated in 2010 and a further £166m the following year; however with the shares down 30% eighteen months after they listed, Bolton handed over the reins in April 2014.
GEARING AND DIVIDENDS
FCSS carries a much higher level of gearing; BGCG can gear up to 20%, so its figure is likely to rise.
JCGI is one of a few JPMorgan trusts that set a dividend at 4% of net asset value.
Dividends for BGCG may fall over time, given the fund manager’s preference for growth stocks; its open-ended fund only pays out 0.6%, but the trust has pledged to maintain a 7.15p dividend for the years ending Jan 2021 and Jan 2022 and has three years’ worth of revenue reserves.
LONG-TERM RETURNS
JCGI has the edge in 2020 and over the last 10 years, but its prior performance reinforces how difficult the China market was for a long time; those investing at launch in Oct 1993 were down 50% ten years later and still flat in Mar 2009, nearly sixteen years later.
However, all three trusts have managed to beat both the MSCI China and MSCI Golden Dragon (China, Hong Kong, and Taiwan) over the last 10 years, which is up around 160-170%.
funds, which range from +40% to +255% with an average of around +150%.
SUMMARY
There aren’t a lot of China-focused investment trusts to choose from but all of them look pretty promising.
Baillie Gifford is betting big on China, across many of its existing funds and trusts, so it will be interesting to see how this new trust carves its niche; increased focus on unlisted investments may well provide that, although it could take a few years for it to build up to 20%.
I’d expect all three of these trusts to be quite volatile, as Chinese markets have been in the past; although I’ve moved away from regional and country-focused investment trusts
in recent years, there seems to a decent case for making an exception when it comes to China.
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They also compare favourably with 21 open-ended China
DIY Investor Magazine | Sept 2020 34