Specialist funds focus on a wide variety of sectors. They help investors access niche areas, although they should usually only account for a small portion of your portfolio.
Specialist funds cover a broad range of themes, including:
- Energy - including major oil & gas producers, like BP, Exxon Mobil and Shell (formerly known as Royal Dutch Shell), as well as much smaller exploration and production companies
- Infrastructure - these funds often invest in companies that own or operate infrastructure projects such as roads, railways or airports, or those that supply utilities like water or power
- Resources - funds that typically focus on companies that mine commodities, such as iron ore, gold, copper or diamonds. They might also invest in areas such as energy and agriculture
- Agriculture - provides exposure to companies that grow food such as corn, wheat or rice. Some funds provide broader exposure by investing in companies in the food production chain like fertiliser producers, distributors, or supermarkets
- Technology - funds focused on technology companies
- Other areas such as financials, healthcare, biotechnology, and even artificial intelligence
Our view
The performance of specialist areas of the market tends to come in waves – when a particular area is in favour it normally benefits funds investing there, but the reverse is true too. This means you should be prepared to take a long-term view and accept the associated volatility.
Our analysis shows it’s difficult for managers investing in a specialist area of the market to perform better than their benchmark through good stock picking – the ability to invest in companies with great growth prospects, no matter what geographical area or sector they’re in.
Specialist fund managers are restricted on where they can invest, but managers that run more diversified funds can choose if and when to increase exposure to a specific area. We think a balanced and broader portfolio of funds is likely to provide enough exposure to areas like oil & gas, healthcare, gold, and agriculture. Managers of more generalist funds can add to or reduce their investments in these areas when they feel it is most appropriate.
We think investors who want to invest in a specialist area should ensure it forms a small portion of a diversified portfolio.
Investment notes
Please remember past performance is not a guide to future returns. Where no data is shown, figures are not available. This information is provided to help you choose your own investments, remember they can fall as well as rise in value so you may not get back the original amount invested.
Wealth Shortlist Funds
Funds chosen by our analysts for their long-term performance potential.
See the Wealth Shortlist
