One other concern was the level of cash and this impart may because the fund is large at over £1 billion with such a concentrated portfolio (just 36 holdings)
We recently had an update with Ben Whitmore who is the manager of the Jupiter UK Special Situations Fund. The style of management is very similar to the funds offered by Schroder and Investec. In the discussion it became clear that investors wanting this type of strategy are going to have to base their decision on the manager and the holdings as the performance between the three isn’t that much different with perhaps Investec being the weakest.
The thesis behind the fund is to buy what’s cheap today with a focus on the 10-year average price to earnings ratio, return on operating assets and the balance sheet and cash conversion. The subjective element of the process is the quality of the franchise as this is what drives the final decision on what is held.
What slightly surprised me was that of the 36 holdings only 13 are on low P/E ratios (below 10). Six are on what might be classed as high. This may be typical across these funds but investors might wish to explore this further. One other concern was the level of cash and this impart may because the fund is large at over £1 billion with such a concentrated portfolio (just 36 holdings).