"Generally balance sheets are much stronger than I expected, with many companies often having net cash positions. Combined with the fact that Chinese authorities like to create 'champions', this will provide positive opportunities for investors over the longer term," he said.
Bolton warned on corporate governance and policy risk, however, saying the issues are still a concern within some companies.
China vs UK, 3-yr
Source: Financial Express Analytics
The manager has built his portfolio to take advantage of the structural changes he is seeing in China, with retail as a key sector.
"The portfolio is exposed to a number of retailers, such as department stores and sports goods retailers, electrical goods, shoes and jewellery producers and other areas driven by consumer spending such as wine and spirits, restaurants, hotels, automobiles, telecom and internet," the manager said.
China Special Situations launched to much fanfare in April, with Bolton relocating to Hong Kong to run the fund. To date, it has outperformed its sector, but it is difficult to judge performance over such a short timeframe.
China Special Situations since launch
Source: Financial Express Analytics
Data on Trustnet show the manager outperforming his peer group composite by 68.5 per cent over a nine year period. He previously managed the Fidelity Special Situations fund.
The China Special Situations portfolio is primarily invested in Chinese stocks listed in Hong Kong and the US, and has some exposure to Chinese 'A' shares as well as Chinese stocks listed elsewhere.
Longer performances
Source: Financial Express Analytics
A glance at some longer-serving China-focused trusts gives us an indication of what to expect from the geography. Vision Capital Advisers Vision Opportunity China and Pacific Alliance China Land both outperformed the MSCI China in the three years-to-date; the former abundantly so. In the three years since its launch in November 2007, it has returned 133.9 per cent to investors in sterling terms by investing in Asian Pacific equities. The fund is small, with assets under management (AUM) at $119.8m, reflecting the opportunities in China.