Aditya Birla Sun Life Special Opportunities Fund NFO: Should you invest?

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Aditya Birla Sun Life currently has an equity open ended scheme available for subscription. The scheme, named Aditya Birla Sun Life Special Opportunities Fund, aims to offer long term capital appreciation by investing in special situations such as corporate restructuring, change in government policies, companies going through temporary but unique challenges and other similar instances. The New Fund Offer (NFO) is available for subscription until 19 October 2020.

Here are the NFO details

Scheme NameAditya Birla Sun Life Special Opportunities Fund
Scheme Type Open ended equity scheme
NFO Period 5 – 19 October 2020
Scheme reopen (ongoing offer) date Within 5 business days from date of allotment
NAV INR10 per unit
Minimum investment INR500, in multiples of INR1 thereafter
Scheme Plans/Options Regular Plan and Direct Plan
Growth Option and Dividend Option
Entry Load Nil
Exit Load 0.5% on redemption / switch-out of units within 90 days from the date of allotment
Max Total expense Ratio (TER)  2.25%
Fund Manager Anil Shah, Chanchal Khandelwal
Benchmark S&P BSE 500 TR Index

Aditya Birla Sun Life Special Opportunities Fund: Asset allocation

Investment category Risk Profile Minimum Maximum
Equity & Equity related instruments of special situations theme High 80% 100%
Other Equity & Equity related instruments High –   20%
Debt, Units of MF Schemes, MMI and Cash & Cash Equivalents Low to Medium –   20%
Units issued by REITs & InvITs Medium to High   – 10%

Should you invest in special situations fund?

Special situation investing is a tried and tested theme in stock markets and some high profile investors have used it to generate exceptional returns. However, there are some downsides too when it comes to this investing style.

Compared to a more diversified mandate, a thematic fund based on special situations theme, is likely to be more aggressive and this results in a higher risk-reward positioning. Hence, this fund may be more suitable for a more evolved or nuanced investment with a higher risk appetite as compared to a diversified equity fund.  

This is also important to note that investing in a thematic fund like this is based on the premise that the Fund will seek to invest in companies belonging to specific sectors/theme. By definition, this limits the capability of the fund to invest in other sectors and there could also be a genuine shortfall of special situations at times.

Although the fund has the flexibility to invest up to 25% of the corpus in foreign securities in periods when the opportunity in the India market may be limited, the returns generated are subjected to higher transaction costs and currency conversion costs.

A high concentration of investments by the fund also reduces the returns visibility as returns could be totally unpredictable in a limited set of special situations opportunities.

Overall, Aditya Birla Sun Life Special Opportunities Fund is a scheme for investors with high risk taking capabilities. Should you subscribe or give it a miss is entirely based on your risk references. Please consult your investment advisor before investing.

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