Schroder UK Alpha Plus A Accumulation Units

As we move into 2012 UK government and consumer finances remain squeezed. Certain sectors and companies could struggle in this environment. Retailers and supermarkets experienced mixed fortunes over Christmas, for example. Yet Richard Buxton, manager of the Schroder UK Alpha Plus fund, believes the long-term prospects for some remain robust. Take Burberry, the high-end fashion retailer. Healthy demand from Asian consumers is benefiting the company, helping it maintain growth.

Certain goods and services will always be in demand, regardless of prevailing economic conditions. Medical and healthcare products, sold by the likes of GlaxoSmithKline, are a classic example, as are the food products and ingredients sold by Tate & Lyle. Both companies feature among Richard Buxton's largest holdings.

Few areas currently split opinion as much as banks. Some investors worry about their funding requirements and increased regulation, but Richard Buxton believes they can work through their losses, so holding banks such as Lloyds could pay off in future, although short-term volatility is likely.

Similarly, mining and energy companies endured a tough 2011. While commodity prices are subject to fluctuations many commodities are finite resources for which demand could remain robust over the longer term. Richard Buxton suggests this could stand companies searching for and extracting commodities, such as Rio Tinto and Xstrata, in good stead.

This is a concentrated and higher risk portfolio, focusing mainly on larger UK companies. Exposure to more economically sensitive companies hurt performance in 2011, but he remains positive on these companies on a long-term view. Recently, he has used share price falls as a chance to top up holdings, including technology company Misys which he views as in a strong financial position with good prospects.

We hold Richard Buxton in high regard, believing him capable of recovering from a disappointing 2011 and achieving attractive long-term returns. Please remember past performance is not a guide to the future and any investment can fall as well as rise in value. We are pleased to retain this fund on the Wealth 150 list of our favourite funds in each sector.