Glossary: Special situation funds

Funds that seek out companies that have growth potential brought about by a possible bid for the company, a new discovery or patent, a revaluation of the company’s assets, sale of a loss-making subsidy or some other anticipated benefit. Unlike a recovery fund, which seeks companies with bombed-out share prices in the hope some catalyst (new management, restructuring of corporate debt) will spark a recovery in the share price, the manager of a special situations fund is looking to invest in intrinsically sound companies undergoing a turnaround or some other change that the market has failed to properly value.

Relevant to: Funds

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