Success continues following Nick Greenwood's appointment as fund manager
A third of the Solus UK Special Situations fund has been re-invested and the portfolio has continued its top decile performance, following the appointment of Nick Greenwood as fund manager in March 2001.
Greenwood replaced ABN Amro fund manager Nigel Thomas, whose name had been synonymous with the fund's past good performance.
ABN Amro launched its own special situations fund, Select Opportunities, in March and raised £81m during the offer period. The fund is now some 80% invested, according to the group.
Solus Special Situations had some £60m in assets in March but by 1 May this had fallen to £40m, according to Standard & Poor's figures. The fund has been a consistent top performer since its launch in 1991. Its three and five-year figures place it first out of 241 and 209 funds respectively over those time periods in the All Companies sector.
For the three months to 1 May 2001, the fund is ranked 11 out of 302 funds in the UK all companies sector, based on returns of -0.03%. Greenwood said: 'It is an unconstrained fund and it is therefore inappropriate to refer to asset allocation. We are pure stock pickers and have no comparison to any benchmark.'
Since taking over the fund, a third of the portfolio has remained unchanged, another third has had the weightings adjusted and the remainder is made up of brand new holdings, said Greenwood.
The new positions in the fund include the chemical company Victrex, Aim-listed platinum mining company Aquarius Platinum and Biofocus, an Aim-listed library of new chemical entities. Greenwood has also bought into Proactive Sport, a football agency and Regis, which provides office accommodation.
Despite being a stock picking fund, Greenwood does favour certain themes. He said: 'At the moment, I like the fuel cell area because after a lot of talk it looks as though they will be used in buses and taxis. There are currently trials in Europe and platinum companies should also benefit.'
He also likes emerging drug companies and is building up his exposure to the sector, citing Phytopharm and Acanvis as two up and coming businesses.
He said: 'The reason we want to increase our exposure to these sort of companies is because it is the small businesses that develop the blockbuster drugs. It will take some time because we like to get to know the companies very well.'
In terms of style, Greenwood said: 'We look at the management and P/E's and then decide whether it has the potential to grow or not.
'Many perceive the fund to be risky but, as we do not have a benchmark, it is irrelevant to talk about volatility around an index. The unit price of the fund rarely moves by a few pennies either way, which means it could be argued that it is less risky than some index funds.
'The fund contains 40 holdings, the biggest of which is FKI at 4.3%. This means there are no big movers and the average holding is 2.5%, so if the stock halves in value then the fund would only move down by 1.25%.'
Cautious, Balanced & Dynamic Growth
Cowardly, boring or sensible
Latest news and analysis
‘Most significant’ upgrade since launch
Changes happening over coming months