Specialist funds can increase returns and diversify risk, but should only be used by advisers and investors who know clearly what their risks are too
The IMA defines specialist funds as having an investment universe not accommodated by the mainstream sectors. It seems to me that in providing an assessment of their role in a portfolio we might usefully sub-categorise the sector further. The first sub-category would be those funds that invest in equities on a geographic basis, very often concentrating on a single market such as Korea or China, or an emerging region such as Latin America. The second sub-category would again be equity-based but concentrating on a particular sector or theme, with examples being financials or healthcare. The t...
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