What are Special Situations Funds
While disruption conventionally has a negative connotation, it is not always a bad thing. Disruption has changedthe world as we know it. For example, technologies such as cloud computing and the current pandemic situation have changed the way people work. Likewise, eCommerce businesses have changed the way people shop.
Disruptive companies are those at the forefront of innovation, however, there are several other beneficiaries of disruption across the value chain—enablers, who are the conduit for change or the ones that make disruption happen, and the adaptors—the positive respondents or those who quickly adapt to the transformed landscape. Further, disruption is aided by factors such as regulatory changes, evolving consumer behaviour, sector dynamic shifts, and global events.This market disruption gives rise to temporary dislocations in the price of stocks, as financial markets are slow to recognize disruption, which creates opportunities for wealth creation.
You can invest in such opportunities through a Special Situations fund. Let us look into what a special situations fund is.
Special situations such as events (in the short term), dynamic shifts in sectors (in the medium term), and overall disruption and innovation (in the long term) present opportunitiesfor wealth creation when identified at the right time. Mutual funds that aim to capture such special opportunities are known as Special Situation funds.
Fund managers managing special situations funds identify sectors and stocks that are witnessing disruption. Through in-depth research, analysis, and market know-how, fund managers cherry-pick stocks that look promising with a potential for growth in the long term.The fund manager will pick stocks that are either currently underperforming but have inherent potentialfor growth or are currently undervalued as and when opportunities arise.
Special situations funds allow investors to make the most of disruptive growth and even adverse situations. Investors can invest in these funds to further diversify their portfolios as standalone diversified funds do not offer access to such unique themes.
With the Indian economy primed for disruption and the pandemic only accelerating disruption in businesses, the disruption theme may be an ideal investment opportunity for investors with an investment horizon of 5 years or longer.
Disclaimer: This article represents the views of Axis Asset Management Co. Ltd. and must not be taken as the basis for an investment decision. Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited nor Axis Asset Management Company Limited, its Directors or associates shall be liable for any damages including lost revenue or lost profits that may arise from the use of the information contained herein. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s).
Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to Rs. 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC). Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time.
Axis Special Situations Fund - An open-ended equity scheme following special situations theme.
The information on sector(s)/stock(s)/issuer(s) mentioned in this presentation is provided on the basis of publicly available information illustration purpose only andshould not be construed as any investment advice / research report/recommendation to buy / sell / hold securities by Axis AMC / Axis Mutual Fund. The Fundmanager may or may not choose to have any present / future position in these sector(s)/stock(s)/issuer(s).
Disclaimer: This article represents the views of Axis Asset Management Co. Ltd. and must not be taken as the basis for an investment decision. Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited nor Axis Asset Management Company Limited, its Directors or associates shall be liable for any damages including lost revenue or lost profits that may arise from the use of the information contained herein. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s). Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to Rs. 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC). Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time.
Past performance may or may not be sustained in the future.
Mutual Fund Investments are subject to market risk, read all scheme related documents carefully.
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