Special Situations

guileyrulez

Hi,

Can anyone please give some advice behind the Special Situations funds? e.g. How do they work? Any pitfalls to be aware of? Any tips as to where I could find the best fund?

Many thanks in advance

Shaolin_Monkey

It doesn't have a precise definition and there's no specific rules that special situations funds have to stick to beyond the rules of the sector they are placed in. Generally, but not always, funds with special situations in the name state they are value orientated looking for companies that the managers feel are undervalued, so they share this with "recovery" funds. But for the most part it's just a marketing name.

I've personally invested in Liontrust Special Situations and its done quite nicely..

Linton

"Special Situations" has no clear definition. You need to examine what the fund invests in before buying. You can get the information from trustnet.

So for example Fidelity Special Situations, which did perform superbly for perhaps 25 years before the manager left, goes for large companies with what the manager sees as temporary value opportunities (eg BP after the leak in the Gulf of Mexico). Marlborough Special Situations on the other hand is very much a Small Companies fund and continues to have an excellent record.

gadgetmind

Some special situations funds will also look at mergers, demergers, rights issues, warrants, and various other situations and instruments.

I don't hold many funds, but Liontrust Special Situations is one I do hold as their investment strategy seems to roughly match the approach I have used myself over the years.