Neptune Global Smaller Companies fund

bowlhead99

grey_gym_sock wrote: »

... then you shouldn't invest in the stock market at all, but should go and start your own business. you should also make sure your business doesn't sell to others, or employ others, or use infrastructure built by others. you should also make sure forget anything you learnt in school or from your parents, and make sure to catch any diseases you previously avoided thanks to medical care provided by others. and so on

Yes of course, as I mentioned it was a simplified example. Talking about if you wanted to buy shares but didn't want your personal performance to be skewed by the actions of others around you (ie participating in the scheme you were in). Obviously if you don't want to have your results be affected by anyone around you at all, you can't directly or indirectly own assets which are bought on any market at all, out even off market from a willing seller.

But I suspect you knew what I was getting at

more seriously ... with real funds we're not talking about a few quid uninvested in a fund worth a few thousand quid. it's more like a few thousand quid uninvested in a fund worth a few million (or a lot more). and while the manager may not practically be able to invest a few thousand quid across all the shares the fund is invested in, they can practically invest it in an ETF or futures, tracking an index broadly similar to what the fund usually invests in. so "cash drag" is easily enough avoided if they want to. this only breaks down if what they usually invest in isn't quoted at all (e.g. unlisted companies, or direct real estate); in which case, IMHO perhaps they shouldn't be using an open-ended fund structure in the first place.

Yes if you look at the fund that's the subject of this thread, the idle money which isn't invested in specific investee companies is held in a liquidity pool containing (but not exclusively) cash, forward FX contracts, S&P options etc. It's not *just* cash but if someone doesn't know how this stuff works it can be easier to explain it with context they understand rather than knowingly prompt further questions.

For example, the price the new subscriber buys in at won't be exactly the NAV of the fund immediately prior to their admittance - it is often an approximation taking into account the cost of dealing with their money and paying transaction costs, stamp duty etc as funds are deployed etc. But then you have to start explaining swing pricing etc. And having done that there's always the next layer of complexity on the horizon to keep lengthening the explanation in case they can't be bothered to read the prospectus. So at some point the explantation will inevitably get cut short at junior school level instead of going on to the GCSE and AS level and A level and university undergraduate and postgraduate levels.:)

kinger101

aroominyork wrote: »

I don't recall Amazon being a special situation up until 2016.

Special Situation isn't that defined. Some special situation funds include large-cap businesses which are difficult to replicate.

tg99

grey_gym_sock wrote: »

and while the manager may not practically be able to invest a few thousand quid across all the shares the fund is invested in, they can practically invest it in an ETF or futures, tracking an index broadly similar to what the fund usually invests in. so "cash drag" is easily enough avoided if they want to. this only breaks down if what they usually invest in isn't quoted at all (e.g. unlisted companies, or direct real estate); in which case, IMHO perhaps they shouldn't be using an open-ended fund structure in the first place.

Direct property managers can also use futures based on direct commercial property to manage cash drag albeit this is not a particularly liquid market and hence some managers will tend to invest a portion of their liquid assets in REITs as a proxy for direct property holdings particularly given the need to hold a higher proportion of the fund in readily realisable assets these days post the whole Brexit gating/suspension episode.

aroominyork

kinger101 wrote: »

Special Situation isn't that defined. Some special situation funds include large-cap businesses which are difficult to replicate.

I don't think barriers to entry comprise a special situation. The type of companies you describe are just the sort the Trains and Smiths of this world love, and surely they are out and out growth funds, not special situations.