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Schroder UK Mid 250 - a brief update

Kate Marshall | Thu 11 February 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.

Andy Brough is one of the UK's longest-standing small and medium-sized company managers, having run the Schroder UK Mid 250 Fund since 1999. We recently took the opportunity to take a closer look at the fund, its performance, and recent portfolio changes.

  • The fund's housing-related stocks performed well throughout most of 2015. However, housebuilders Bovis Homes and Redrow, and property business Grainger, have detracted from performance in recent months. Andy Brough maintains his positive outlook for these companies, which he expects will benefit from the UK's rising population and lack of housing supply.

  • Exposure to oil exploration and production company Premier Oil, and oil equipment business Lamprell, have also weighed on performance as oil prices have come under pressure. That said, the manager believes Premier Oil's upcoming acquisition of North Sea oil and gas fields owned by Eon could prove transformative for the business.

  • New positions in emergency home repairs business Homeserve and casino and bingo hall operator Rank have been established. The manager believes both companies have exciting growth prospects. In financials, a position in emerging markets fund manager Ashmore was initiated as Andy Brough believes the business could be subject to a takeover, which could benefit the share price.

  • Looking forward, the manager continues to seek companies with defensible market positions and the ability to improve profitability. In the belief that rising disposable incomes in the UK will be spent on items such as holidays and cars, Andy Brough remains positive on automobile retailers such as Pendragon and Inchcape, as well as travel operator Thomas Cook. Specialist retailers such as Halfords and Pets at Home are also held.

Performance review

It has been a difficult couple of years for the fund - over the past two years the fund has lost 4.8%* compared with a gain of 11.6% for its benchmark, the FTSE 250 Index. Our analysis suggests the manager's stock picking has detracted value, as has the fund's sector positioning. While the fund has demonstrated periods of outperformance in the past, since launch the fund has underperformed its benchmark by 24.7%. Please remember past performance is not a guide to future returns.

Annual percentage growth
Feb 11 -
Feb 12
Feb 12 -
Feb 13
Feb 13 -
Feb 14
Feb 14 -
Feb 15
Feb 15 -
Feb 16
Schroder UK Mid 250 -6.1% 31.6% 33.6% -3.4% -1.4%
FTSE 250 Mid (X It) TR -2.1% 26.0% 22.5% 7.1% 4.2%

Past performance is not a guide to future returns. Source: Lipper IM* to 01/02/2016.

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Our view on this fund

Andy Brough is a highly-experienced manager investing in small and medium-sized companies. He also has the support of Schroders' wider UK team of investment analysts in running this fund. Please note small and medium-sized companies can be more volatile than their larger counterparts.

The fund does not currently feature on the Wealth 150 list of our favourite funds across the major sectors. We do not feel the manager's stock picking has added enough value over the long term, and the fund has failed to outperform its benchmark over a prolonged period.

Our favoured funds investing in this area of the market can be found 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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