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Does anyone know precisely what the term "special equities" means?
I have owed Royce Special equities fund (RYSEX) for quite a while, but I just realized that there are other funds and companies that use the term: e.g. Eaton-Vance Special Equity Fund (EVSEX), and Skyline Special Equities Fund (SKSEX)
Who coined the term, when did it originate, and what in the world does it mean?
Largely I think it’s another one of the fund industry’s ambiguous marketing terms, but when I hear it I usually think of value stocks and often small cap stocks that are depressed but have some unusual catalyst for improvement— the potential for a merger, some hidden asset on their balance sheet Wall Street is ignoring, a new promising product in development, a conglomerate that is hard to analyze but could be broken up and different parts of the business sold for more than the conglomerate’s stock is currently worth—that sort of thing. In other words this is not the traditional blue chip growth stock that is easy to analyze. Still, it is not the best of terms.
I guess so long as your fund has at least "80% special" in its make up your fund manager is safe to call it that...
Investor Protection On Jan 17, 2001, the Securities and Exchange Commission (SEC) tightened their mutual fund regulations: mutual fund companies are now required to invest at least 80% (an increase from the previous 65%) of their portfolio in the strategy advertised by their name. If the mutual fund company chooses not to have 80% of its holdings reflect the name of the fund, it must change its name to reflect accurately the fund\'s investment strategy. If, after July 2002, mutual funds are not in compliance with the rules, violation could result in an investigation by the SEC\'s Division of Enforcement. Source:https://investopedia.com/articles/mutualfund/03/040203.asp
Specialty for me means funds held form a long term perspective that do not fit within the other sleeves within my portfolio.
Currently, my specialty sleeve holds four funds with themes on infrastructure (PGUAX), business development and private equity (LPEFX), developing markets (NEWFX) and a commodity strategy investment (PCLAX).
My spiff sleeve generally holds funds that are held for a short time frame centering around seasonal and/or technical based momentum strategies.
I'm thinking, for me, specialty entails a broad brush allowing for funds that have some type of special charcter. An example of this would include (but liminted to) sector funds, special value and theme funds, etc.
Well from what I can find or tell it seems to depend upon who you ask. Royce has this to say about RYSEX "Small-cap value fund (generally market caps up to $3 billion) that looks for conservatively managed companies with transparent accounting that have a viable niche or franchise whose stock can be bought below its economic value."
Skyline describes SKSEX as a fund which: "Seeks maximum capital appreciation primarily by investing in stocks the subadviser considers to be undervalued."
Eaton Vance defines their version of 'special equities' in EVSEX as: "The Fund invests primarily in stocks of emerging-growth companies — those expected to achieve long-term earnings growth that exceeds the average of all publicly traded companies in the U.S."
And First Investors seems to have the most complete description: "The investment seeks long-term growth of capital. The fund invests primarily in common stocks of small-size companies that the fund's adviser believes are undervalued, and generally invests in companies that are experiencing a "special situation" that makes them undervalued relative to their long-term potential. Developments creating special situations may include mergers, spin-offs, litigation resolution, new products, or management changes."
Does anyone know precisely what the term "special equities" means?
I have owed Royce Special equities fund (RYSEX) for quite a while, but I just realized that there are other funds and companies that use the term: e.g. Eaton-Vance Special Equity Fund (EVSEX), and Skyline Special Equities Fund (SKSEX)
Who coined the term, when did it originate, and what in the world does it mean?
Marketing gimmick. There is absolutely nothing special about any of the funds you mention.
"special equity" means "the price will only go up". Only a special equity fund can make this promise, which makes the funds pretty special in their own right.
Footnote to history, the above specialness is the reason Royce considered renaming RYSEX as the Royce Really Special Equity Fund, but ultimately decided instead to just create a few more share classes and parallel funds.
Thanks, everyone for the responses. I guess the answer is that the term does have a meaning or meanings, sort-of. I had wondered if it were a term of art and no, it isn't.
For a while I even mused whether a special equity fund was a fund that invested in special equities or a special fund that invested in equities.
In answer to my other question: who coined the term and when, the earliest fund is Eaton Vance which goes back to 1968. So that's the first usage I know of.
There are also "Special Opportunity" funds. I own one - BOPAX.
And I stopped thinking Royce was special the day I discovered they are owned by Please break-a-leg-no-I-mean-really Mason. The cynic in me will never believe Royce operates independently. And the fact they used to keep creating funds in a crowded small cap market annoyed my no end. Wonder if they thought if that was a such a good idea why they closed so many of them after the financial crisis.
They were adding "Value". They they were adding "Value Plus". All a big Minus for me.
You forgot the most common BS term of all - Strategic!
Apparently the "Tactical" guy is losing you money thinking about tomorrow, while the "Strategic" guy is gathering assets based on short term performance.
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funds-with-alpha-in-their-name-actually-underperform-their-benchmark
I guess so long as your fund has at least "80% special" in its make up your fund manager is safe to call it that...
Currently, my specialty sleeve holds four funds with themes on infrastructure (PGUAX), business development and private equity (LPEFX), developing markets (NEWFX) and a commodity strategy investment (PCLAX).
My spiff sleeve generally holds funds that are held for a short time frame centering around seasonal and/or technical based momentum strategies.
I'm thinking, for me, specialty entails a broad brush allowing for funds that have some type of special charcter. An example of this would include (but liminted to) sector funds, special value and theme funds, etc.
Skyline describes SKSEX as a fund which: "Seeks maximum capital appreciation primarily by investing in stocks the subadviser considers to be undervalued."
Eaton Vance defines their version of 'special equities' in EVSEX as: "The Fund invests primarily in stocks of emerging-growth companies — those expected to achieve long-term earnings growth that exceeds the average of all publicly traded companies in the U.S."
And First Investors seems to have the most complete description: "The investment seeks long-term growth of capital. The fund invests primarily in common stocks of small-size companies that the fund's adviser believes are undervalued, and generally invests in companies that are experiencing a "special situation" that makes them undervalued relative to their long-term potential. Developments creating special situations may include mergers, spin-offs, litigation resolution, new products, or management changes."
Marketing gimmick. There is absolutely nothing special about any of the funds you mention.
Footnote to history, the above specialness is the reason Royce considered renaming RYSEX as the Royce Really Special Equity Fund, but ultimately decided instead to just create a few more share classes and parallel funds.
For a while I even mused whether a special equity fund was a fund that invested in special equities or a special fund that invested in equities.
In answer to my other question: who coined the term and when, the earliest fund is Eaton Vance which goes back to 1968. So that's the first usage I know of.
And I stopped thinking Royce was special the day I discovered they are owned by Please break-a-leg-no-I-mean-really Mason. The cynic in me will never believe Royce operates independently. And the fact they used to keep creating funds in a crowded small cap market annoyed my no end. Wonder if they thought if that was a such a good idea why they closed so many of them after the financial crisis.
They were adding "Value". They they were adding "Value Plus". All a big Minus for me.
Apparently the "Tactical" guy is losing you money thinking about tomorrow, while the "Strategic" guy is gathering assets based on short term performance.