Talking Point 

Schroders UK Alpha Plus fund shifts from value to quality

 

Picking quality businesses at a reasonable price will help to protect investors’ capital during times of market turbulence, Nick Kissack, portfolio manager, UK equities at Schroders, has said.

As the UK deals with the current uncertainty around the terms of the UK's departure from the EU, Mr Kissack told FTAdviser he believed this strategy would outperform across the cycle.

Mr Kissack said: "We remain cognisant of the risk areas within the economy, such as the financial sector, but we continue to focus on finding those dependable high quality business models with attractive returns, strong management teams, and that come at a reasonable valuation."

Mr Kissack joined Schroders in February, along with Bill Casey from Janus Henderson, to co-manage the Schroders UK Alpha Plus fund.

Since joining the firm they have transitioned the portfolio to a large capitalisation bias, only investing in companies with a minimum market capitalisation of £1.5bn to £2bn.

Mr Kissack said: "We believe this improves the liquidity profile for our investors."

He added: "We also transitioned the investment style of the fund from pure value to one of quality, or what we like to call quality at a reasonable price.

"From a quality aspect, this means looking for companies that have strong barriers to entry, and a sustainable business model."

The concentration of the fund has also been increased, by reducing the number of holdings from 45 stocks to 35 stocks, he said.

The objective of this is to provide investors in the portfolio with a higher alpha generation product over the longer term.

ima.jackson-obot@ft.com

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