![Special opportunity funds are especially suitable for long-term investors. (Representative image) Special opportunity funds are especially suitable for long-term investors. (Representative image)](https://images.news18.com/ibnlive/uploads/2021/07/1627283897_news18_logo-1200x800.jpg?impolicy=website&width=510&height=383)
Special opportunity funds are especially suitable for long-term investors. (Representative image)
Fund houses currently offering special situation funds include Aditya Birla Sun Life MF, ICICI Prudential MF and Axis MF.
Asset managers are showing enthusiasm for special opportunity funds, and three of these companies recently submitted draft documents to market regulator Sebi to float schemes based on the theme.
According to the Securities and Exchange Board of India (Sebi), three asset management companies (AMCs), including WhiteOak Capital, Kotak Mahindra, and Samco, launched the Special Opportunities Fund during March and April. ) or a draft document for the Special Situation Fund.
Currently, Aditya Birla Sun Life MF, ICICI Prudential MF and Axis MF are the fund houses that offer special situation funds.
Special Opportunity Funds are mutual fund schemes that seek to capitalize on opportunities created due to special conditions in the market. These are unique situations, opportunities or challenges facing a company, sector or entire economy.
Feroze Azeez, Vice Chairman, Anand Rathi Wealth Ltd, said special situations funds are often subject to regulatory or policy changes, management restructuring such as mergers or consolidations, technology disruptions or temporary issues in the operating environment.
Although these funds were previously categorized under Category I of Alternative Investment Funds (AIFs), mutual funds are now exploring these funds to appeal to a broader investor base.
“Most of the different categories are already explored by mutual fund houses, which limits their ability to introduce new funds within those categories. Thematic investing provides space for AMCs to explore and experiment with new themes and bring in new funds,” said Azeez.
Manuj Jain, co-head of product strategy at WhiteOak Capital AMC, said the top 10 holdings of special situations funds typically differ significantly from benchmark index and flexi-cap funds.
Special opportunity funds are especially suitable for long-term investors. The risk-reward profile makes these funds an attractive option for those who understand and are comfortable with the potential volatility, he added.