I heard of one Unit Trust that invests in Special Situations in South East Asia. Naturally, I was curious what constitute special situations. The companies bought by the fund managers are the ones that have yet to gain attention by the market. The fund managers study these companies in depth. They picked up information through their own research and through discussions with the companies. The information they gathered are not generally known publicly in the market.
The fund managers focused on the potential for growth from a medium to long time horizon and believed that time will justify their investments in these companies. The fund managers also seek out mid-cap and small-cap stocks where opportunities are significant but they are undervalued at the present time. They also pick up some stocks that could have fallen in value for unwarranted reason due to the general market decline and may be subjected to renewed investor interest and a share price recovery.
In one particular Unit Trust, their special situations include examples such as corporate restructuring or re-engineering, management change, new product introduction or innovation, new business injections, and changes in the regulatory and business environment. All these special situations may unlock the values of specific companies in the longer term.
The risk rating is naturally high but the reward is also high if the special situations turn out to be a winner. This unit trust is suitable for investors who can tolerate high volatility of share prices.
Written on 3/12/2007 4:47 PM
Copyright © 2007, the author known as LKT in Singapore.
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