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Schroder UK Opportunities Fund - a brief update

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.

The Schroder UK Opportunities Fund is run using a business cycle approach to investing. This means stock selection is driven by the manager's belief that specific companies perform differently during each of the four stages of the business cycle - recovery, expansion, slowdown and recession.

Fund overview

  • In fund manager Matt Hudson's view, the recovery in corporate earnings and profit margins is reaching its peak in the UK. Developed markets, including the UK, have also been impacted by the slowdown across China and the emerging markets.
  • As such, he believes we are moving from the expansionary phase of the business cycle towards a slowdown. He has therefore been tilting the fund towards more defensive areas of the market, focusing on companies with strengthened balance sheets that he believes can weather periods of volatility. Positions in companies such as Reckitt Benckiser and Smith & Nephew have recently been topped up.
  • Conversely, the manager has reduced exposure to a number of economically-sensitive companies, including Melrose Industries and Premier Farnell.

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Performance analysis

Since Matt Hudson took over management of the fund in September 2014, the fund has fallen 0.98%*, marginally underperforming the 0.63% loss delivered by the FTSE All Share index, although past performance should not be seen as a guide to future returns and this is over a short period. While our analysis suggests the fund's sector positioning and medium-sized company bias should have provided a tailwind, stock selection has detracted from returns. Investors should note the fund is a concentrated portfolio, which enables each holding to make a significant impact on returns however this is a higher-risk approach.

Annual percentage growth
Nov 10 -
Nov 11
Nov 11 -
Nov 12
Nov 12 -
Nov 13
Nov 13 -
Nov 14
Nov 14 -
Nov 15
FTSE All-Share -2.0% 13.9% 21.2% 0.2% 3.9%
Schroder UK Opportunities 4.0% 30.6% 40.7% -9.0% 2.3%

Past performance is not a guide to future returns. Source: Lipper IM* to 02/11/2015

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Our view on this fund

Matt Hudson has a longer track record in managing a UK equity income portfolio, on which he has delivered attractive returns over the long term. That said, we feel the manager is relatively untested in running a UK growth portfolio and this fund will behave differently than previous ventures. We would prefer to monitor his performance over a prolonged period before considering the fund for inclusion on the Wealth 150 list of favourite funds across the major sectors.

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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