But while buy backs are usually employed to close the discount an investment trust is trading on, the chances of it having a long term impact are slim.
David Coombs, head of multi-manager investments at Rathbone Unit Trust Management, said: "Trusts go to a discount because people are selling and because performance is not great. The best way to get it back to premium is by getting the performance right."
Coombs himself doesn’t own Fidelity Special Situations, but he noted that the fund is currently trading on a 2% discount after trading on one as wide as 8% earlier in the year.
He also said the practice of share buy backs within investment trusts in general is accretive.
"If you buy back your own shares at a discount and then close the discount by doing so, you’re adding value to the shares that are left because you’ve bought assets that you hold at a discount to what they are worth in the market."
This is beneficial to shareholders and may pacify them over the short term. But fundamentally the discount has widened because there are more buyers than sellers, and the main reason for that is the underlying performance of the fund.
In the year to 7 September the fund has returned -27.78, compared to its benchmark’s return of -13.24 and the peergroup’s return of -22.17%.
Bolton has previously defended his move to China and claimed the "admittedly disappointing" performance of his £566m fund will be short-lived.
Certainly he will need to find some better tricks up his sleeve than a share buy back, even if that is a move taken by the board of the trust.
Fidelity China Special Situations’ premium and discount policy, which was discussed at the trust’s latest AGM, said: "The board recognises the price of the shares of the company is affected by the interaction of supply and demand in the market as well as the NAV per share.
"The board regularly reviews the difference between the market price of the shares and the NAV per share, and reserves the right to manage the difference through the powers granted by the shareholders of the company."
Nevertheless, Coombs, concluded: "Buy backs tend to reduce the size of the fund and reduce the liquidity, which is not necessarily in the interests of shareholders over the long term."
