Schroder has unveiled an onshore version of its already successful Schroder ISF Global Recovery fund, following strong demand from clients.
The fund will be managed by the same team consisting of Nick Kirrage, Kevin Murphy and Andrew Lyddon.
It will be a mirror of the Luxembourg-domiciled Sicav – which launched in October 2013 and has been enjoying solid returns – as well as the Schroder Recovery fund, which Mr Kirrage and Mr Murphy have co-managed since 2006.
The fund will focus on investing in global equities with classic recovery characteristics. It will aim to match the long-term investment performance of the Recovery fund and the investment philosophy of the Global Recovery fund.
The offshore Global Recovery fund currently has its highest allocations to North America (33.8 per cent) and Europe excluding the UK (27 per cent), although the team are strict value investors and do not select stocks based on geography.
The fund has an ongoing charge of 0.93 per cent.
MM Comment:
The launch of this new fund is great news for value investors. The management team has gone from strength to strength, particularly with the Recovery fund. In fact, the fund is top quartile over a three-, seven- and 10-year period, according to Morningstar.
The team focuses on a contrarian investment philosophy, with a disciplined focus on buying attractively valued and out-of-favour companies at various stages in the investment cycle. The team admits that a valuation-driven philosophy is not always going to be in favour, but over longer time periods the style generates strong returns.
Value investing is essentially buying stocks which trade at a significant discount to their intrinsic value (based on the price/earnings ratio).
This past year has been tough for value investors however. The group says value has underperformed growth for the longest period on record, and is still trading at its widest discount to growth since the Dotcom bubble in 2000.
The team believes there is a strong case for the recovery of value from their current “depressed” levels. But they predict the potential recovery could be “significant”.
As such, value funds should remain strictly for long-term investors, with a suggested 10-year minimum. If it’s good enough for Warren Buffett…
