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Schroder Core UK Equity - change to investment process

Kate Marshall | Wed 06 January 2016

Investments can go down as well as up so there is always a danger that you could get back less than you invest. Nothing here is personalised advice, if unsure you should seek advice.

David Docherty took over management of the Schroder Core UK Equity Fund in January 2009. Over this time the fund has been managed using a business cycle investment approach. This means the manager has aimed to identify companies most likely to perform well as the economy moves through each stage of the cycle; expansion, slowdown, recession and recovery.

From January 2016, the fund's investment process and portfolio construction will be based purely on individual company analysis and the underlying prospects for these businesses. David Docherty will no longer adopt the business cycle investment approach, which takes into account wider economic factors.

A number of limits imposed on the fund will also be altered, as follows:

Old Limits New Limits
Minimum number of stocks 50 40
Stocks - maximum difference in weighting
compared with the FTSE All Share index
4% 3%
Sectors - maximum difference in weighting
compared with the FTSE All Share index
5% 10%

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As such the fund could become more concentrated, along with greater differences in sector allocations than the benchmark index, the FTSE All Share. Each stock and sector exposure could therefore have a greater impact on performance, although this makes the fund a higher-risk proposition.

Performance

Since David Docherty assumed responsibility, the fund has struggled to outperform its benchmark as well as the sector average. The past two years have proven particularly challenging, with the fund falling 12.8%* compared with a gain of 0.3% and 3.3% for the FTSE All Share index and the sector average, respectively. Although, please remember past performance is not a guide to future returns.

Annual percentage growth
Jan 11 -
Jan 12
Jan 12 -
Jan 13
Jan 13 -
Jan 14
Jan 14 -
Jan 15
Jan 15 -
Jan 16
Schroder Core UK Equity Fund -8.0% 15.5% 22.4% -6.1% -7.1%
FTSE All-Share -3.0% 12.1% 17.8% 1.3% -1.0%
IA UK All Companies -7.1% 15.6% 23.9% 0.6% 2.6%

Past performance is not a guide to future returns. Source Lipper IM* to 04/01/2016.

Our view on this fund

Following a difficult few years for the fund, Schroders appear to be taking steps to improve performance. However, there are no guarantees, particularly as David Docherty will be managing the fund using a new philosophy and process less familiar to him. Presently, we do not feel the manager's track record is strong enough to merit a place on the Wealth 150 list of our favourite funds across the major sectors. Our favourite funds in the UK All Companies sector currently feature on the Wealth 150.

Find out more about this fund including how to invest

Please read the key features/key investor information document in addition to the information above.

Important information - Please remember the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. This article is provided to help you make your own investment decisions, it is not advice. If you are unsure of the suitability of an investment for your circumstances please seek advice. No news or research item is a personal recommendation to deal.


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