The £780m trust’s ongoing charges figure (OCF) is currently 1.7 per cent, which will come down significantly following the change to the AMC.
Commenting on the decision to cut charges, John Owen, chairman of the Fidelity China Special Situations trust, said: "Both the board and Fidelity believe that this competitive pricing will be attractive to new investors considering Fidelity China Special Situations and this will be to the benefit of investors in the company overall."
The fee change, set to take place on 1 April, is the latest in a series of changes that have swept the investment trust industry since regulatory changes in the Retail Distribution Review (RDR) were implemented at the start of the year.
Baillie Gifford also recently reduced the annual management fee on its Shin Nippon IT, Pacific Horizon IT and Edinburgh Worldwide IT.
Last year, Standard Life Investments removed the performance fee from FE Alpha Manager Harry Nimmo’s UK Smaller Companies IT.
A number of investment trusts have also moved to introduce discount control mechanisms, increase dividend payouts and clarify charging structures, all with the intention of making them more sellable post-RDR.
The early signs are encouraging: according to an AIC poll, 73 per cent of investment trust directors believe the new regulatory environment will be positive for closed-ended products, with most expecting increased demand from wealth managers and advisers looking to outsource management of their portfolios.
However, a quarter of those polled expect private investors to also increase their exposure to investment trusts, rather than simply relying on open-ended funds.
The largest, most liquid trusts in mainstream sectors are likely to lead the way, but many experts believe that those in more specialist sectors – such as Fidelity China Special Situations, which sits in the IT Country Specialists Asia Pacific sector – will also benefit.
Ian Sayers (pictured), director general of the AIC, said: "We are positive about the impact that RDR will have on the investment company sector, but of course it's going to take time."
"Given the diversity of the sector, it is not surprising that there are a range of views on the impact and where demand will come from."Andrew Bell, chairman of the AIC, added: "The implementation of the [RDR] this year is an important reform, which evens up the competitive field between the closed- and open-ended sectors, by ending product provider incentives for new investments, as well as ushering in changes in the qualifications regime for financial advisers."
"Investment companies have an opportunity to appeal both to advisers who have not in the past invested heavily in the sector, as well as to private investors, for whom the RDR changes may make investment advice harder to obtain, or who are unwilling to pay for advice that was previously covered by product provider trail payments."
"The quality of communication will be important, to explain the investment rationale for each company as well as to explain policies in relation to the use of borrowings and fluctuations in the price relative to net asset value – or discounts," he added.
Fidelity will hope the reduction in charges will help take the pressure off Bolton, whose trust has disappointed since its launch in April 2010.
Over the last year, it has gained 7.64 per cent, broadly in line with the MSCI China index. It has also beaten the index over one, three and six months.
The trust is down 6.03 per cent since launch in April 2010, significantly underperforming its MSCI China benchmark, which has made 5.89 per cent.
Performance of trust vs index since launch
Source: FE Analytics
Fidelity China Special Sits has also been significantly more volatile, with an annualised score of 23.4 per cent over a two-year period, compared with 20.62 per cent from the index.
The trust is currently yielding 0.8 per cent and trading on a discount of 4.4 per cent, according to the AIC. Its gearing figure is unavailable. Bolton (pictured) is backing consumer demand in China, opting to put the highest weighting in his portfolio in consumer products.
Financials are close behind, with HSBC and Wing Hang Bank featuring in the trust’s top-10 holdings.
Fidelity China Special Sits has a small to mid cap focus, with 52 per cent in small caps, 22 per cent in mid caps, and 26 per cent in large caps.