By Iona Bain

Fund manager Anthony Bolton has taken a personal hit of £1 million by backing his own specialist China trust, reports confirm this week.

Bolton invested £2.95 million when the Fidelity China Special Situations fund launched in April 2010, but has since seen his holding fall to around £1.85 million as share prices plummeted by 38%.

Bolton, who made his name running the Fidelity UK Special Situations fund for 28 years, came out of retirement especially to run the new fund, citing the future potential of China.

But the world's second biggest economy has since entered a sluggish patch, with growth slowing and inflation running high last year. Only today it was announced that the eurozone crisis has severely disrupted China's exports to the EU.

The fund's focus on smaller Chinese stocks has made it particularly vulnerable in stormy markets and it also suffered from the fallout of fraud losses at two US-listed Chinese companies it had invested in.

The problems illustrate that a fund manager's past performance is no guarantee of his or her future success, and that emerging markets can present short-term difficulties to investors.

Bolton has apologised to investors in the £500 million fund and has sought to reassure that consumer spending in China will fuel growth in the long term.

As of today, the fund's shares are trading at around 75.5p, up over a pence. The fund is currently trading at a discount of around 6% to the net asset value of its portfolio.