Investec UK Special Situations fund

Andy Parsons, advice team manager at The Share Centre, explains why investors may wish to consider the Investec UK Special Situations fund to diversify UK exposure in their portfolio.

"As the UK economy continues its slow and winding recovery from recession and many UK companies continue to be cautious in their outlook for 2011, there is a school of investors who believe companies listed on UK markets are offering valuations and opportunities rarely seen.

"We recommend investors seeking exposure to UK companies hold a blend of funds, compromising traditional big core blue chip funds and exposure to the small to mid cap arena.  The Investec UK Special Situations fund is a suitable contender to complement any mainstream blue chip UK equity fund.

"The fund has been managed by Alastair Mundy since August 2002 and is run on his contrarian approach to investing. It looks to provide a combination of income and capital growth through investment in companies he believes are out of favour with the market, undervalued and have the best long term potential to revert to their previous higher levels.

"By undertaking a contrarian approach, investors should appreciate that the fund may have periods of underperformance compared to a more mainstream UK equity fund. Selection of companies is based on purchasing them when sentiment towards them is often at their very lowest with the fund generally holding between 70-80 stocks.

"In terms of performance, over the last few years this fund has clearly demonstrated that the manager has the ability to limit losses in times of hardship, whilst also benefiting when markets are positive. In 2008, he managed to limit losses, losing only -19.58% compared to a sector average of -31.96%, whilst in 2009 the fund returned 37.57% compared to a sector average of 30.40%."