Andy Parsons, advice team manager at The Share Centre, explains how investors with an appetite for risk, could benefit from investing in smaller companies through the Marlborough Special Situations fund.
 
'The Marlborough Special Situations fund aims to provide investors with capital growth by following a speculative policy, investing in smaller companies, new issues and companies going through a difficult period with good recovery prospects.
 
'However, this fund is for those with an adventurous disposition only – given it can invest in any quoted market in the world and indeed can buy unquoted stock, derivatives and forward transactions for the purposes of hedging only.
 
'The fund is managed by Giles Hargreave who is rated one of the best five managers in the UK over the past five years by Citywire. His investment philosophy might be described as bottom up driven and valuation aware; often there may also be themes evident across the portfolio.

'Over most periods, the fund’s returns have been in the top ten of the sector, if not at the top of the pile. In five years it has returned 62.93 per cent, compared with the next best in the 60 strong sector at 35.50 per cent on a cumulative basis to 28 September 2009.

'Despite having witnessed significant growth to date and benefited from an early rally, we believe this fund offers exciting growth potential. In particular, the fund could benefit from future merger and acquisition activity.

'We believe this fund represents an attractive option for investors who are prepared to accept the higher volatility inherent in the smaller company market and who may be seeking to participate in a stock market recovery. Investors should note that funds such as this should never make up more than a small percentage of a portfolio.'