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Two fund houses have launched special opportunities funds. While Samco MF has launched the Samco Special Opportunities Fund, WhiteOak Capital MF came out with WhiteOak Capital Special Opportunities Fund. Kotak MF will also launch its special opportunities fund soon.
Special opportunities funds are the thematic funds that aim to invest in companies which are expected to benefit from specific events like corporate restructuring, government policies, company going through temporary challenges and regulatory challenges.
Currently, there are four schemes that track this theme – Aditya Birla Sun Life Special Opportunities Fund, Axis Special Situations Fund, ICICI Prudential Opportunities Fund and Franklin India Opportunities Fund.
If we look at the past performance of these thematic funds, Aditya Birla Sun Life Special Opportunities Fund and Axis Special Situations Fund underperformed their respective benchmarks in 3 year period.
However, the other two funds ICICI Prudential India Opportunities Fund and Franklin Templeton Opportunities Fund did well across 3, 5 and 10 years.
Let us look at the table to know more about the performance of existing funds:
|
Scheme Name |
Return 3 Year (%) Regular |
Return 3 Year (%) Benchmark |
Return 5 Year (%) Regular |
Return 5 Year (%) Benchmark |
|
Aditya Birla Sun Life Special Opportunities Fund |
18.08 |
19.23 |
- |
- |
|
Axis Special Situations Fund |
15.57 |
19.26 |
- |
- |
|
Franklin India Opportunities Fund |
30.34 |
19.26 |
25.58 |
18.47 |
|
ICICI Prudential India Opportunities Fund |
28.46 |
19.26 |
23.91 |
18.47 |
Chennai MFD Chokkalingam Palaniappan from Prakala Wealth believes that MFDs should recommend special opportunities funds. He said, “These funds are only suitable for clients who have been investing for over 5 years and understand the risk involved in sectoral funds. In my view, investors can benefit from these funds considering the immense opportunities available in the Indian equity markets.”
Seconding Chokkalingam’s view, Mumbai MFD Sadashiv Phene said that these funds allow fund managers to take advantage of unique market conditions. He said, "There are always special situations available in the market that these funds can benefit from those situations. For instance, there were many sectors like consumption that did not perform well during covid. However, they recovered sharply and created wealth for many.”
However, a few MFDs have a different view. Mumbai MFD Saurabh Mittal of Circle Wealth feels that MFDs should avoid special opportunities funds. He said, “I will not recommend special opportunities funds to any of my clients. These funds are very risky and it is difficult to identify such situations that can give benefits in future.”
