Recovery Funds - Primed for growth, or just a good name?

mr_fishbulb

Sorry for the longish post, I've been looking into recovery funds a bit and if they are worth it.

Whilst green shoots may not yet be upon us, talk of there arrival has been increasing and the buzz around "recovery" funds has been growing. These are funds which are designed to take advantage of the recovery of the markets by buying stocks in companies they feel have been unduly brought down by the downturn and are poised to rebound quickly.

All good in theory, but as the author of this CityWire article points out, surely every fund manager should be trying to make the most of the recovery?

Two funds which have been using this strategy for a while are M&G Recovery and Artemis UK Special Situations. They are currently weighted towards energy (BP, Shell) and health (GlaxoSmithKline, AstraZeneca).

I can see why oil companies are in there, but wasn't one of the reason health companies started to drop the fact that their drug patents were coming to an end with no replacements? How is this going to be corrected by a recovery?

I'd be interested to hear what others think of recovery funds. Are they part (or going to be part) of your portfolio? With my fixed rate cash regular saver coming to an end, I'm looking for something a bit more exciting to put a small, regular sum.

mr_fishbulb

Makes me think of the Dove from Above jokes.

.....tumbleweed....

Old_Slaphead

I'd be interested to know how "Recovery" funds differed from "Special Situations" - other than from a marketing angle

turbobob

I think its arguable that any equity fund is a recovery play at the moment. I don't see how weighting towards pharmaceuticals has anything to do with recovery really at this moment in time. The pharmaceutical sector has held up comparitively well compared to say financials or mining.

Reaper

Indeed. Pharmaceuticals are normally considered a defensive stock on the assumption people will carry on buying drugs at roughly similar levels regardless of whether the economy is booming or crashing. I wouldn't think of them as particularly suitable for a Recovery fund.

00ec25

re the M&G recovery fund, make of this what you will as I am not an active investor for managed funds (I invest and tend to leave them there through thick and thin)

I bought M&G recovery in 1987 (so just off the height of the market !), I still hold them and using todays valuation in the last 22 years they have grown 241%

I am sure others will sneer at this performance and will have done better. If you ask would I invest anymore in them at this time, then I'd say not without comparing others

BTW I hold the income class and get the cash divi. The one lesson I did learn over the last 22 years is that the accumulation class meant I paid tax on a distribution value which could vanish when the next valuation comes out meaning I have paid out cash for the tax bill and had nothing to show for it!

M&G performance is better than Artimeis' but I don't know how well they compare with a basic (and cheaper!) tracker fund

you can run the graphs here:
http://www.mandg.co.uk/Consumer/FundInfo/FundsAtoZ/OEICFunds/RecoveryFund/CompareFund.jsp

00ec25

Old_Slaphead wrote: »

I'd be interested to know how "Recovery" funds differed from "Special Situations" - other than from a marketing angle

they don't!

as it clearly states on M&G's own website "M&G Recovery is the original special situations fund."

Jake'sGran

00ec25 wrote: »

they don't!

as it clearly states on M&G's own website "M&G Recovery is the original special situations fund."

Yes, I used to have that one. I have been in the Fidelity Spec Sits for over 20 years. It dropped like most funds but is now going up again.