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Schroder Income

Elite Rated by FundCalibre

This is a deep value driven fund, investing in companies valued at less than their true worth and waiting for a correction. They have little correlation with other income funds, tending to avoid the big income producers in favour of more niche names, where both capital as well as income can grow significantly. This approach is not without risk and performance can be volatile.

Company Description

Founded in London in 1804, today Schroders operates in more than 25 countries, employing more than 3,500 people, close to the markets in which they invest. With more than 35 offices worldwide, Schroders is listed on the London Stock Exchange and invests in a range of asset classes including equity, fixed income, multi-asset and alternatives. The group was awarded the Elite Equities Provider Rating in 2017.

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Fund Manager

Nick Kirrage and Kevin Murphy have worked together at Schroder for over 13 years and head a five-man team that runs global income and recovery mandates. All five started their careers as investment analysts and Nick reckons he spends half his day with his nose buried in company report and accounts; an essential attribute for a value-driven approach.

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Inflation is the silent thief. Investing in companies that can grow sustainable dividends is the only way to beat it.

Nick Kirrage - Fund Manager

The Investment Process

They start by looking for companies valued at low cyclically-adjusted price earnings ratios (CAPE) that also pay a yield. Some companies will disappoint and some will go bust, but the winners will make up for that. Sometimes the catalyst for change takes time and often the stocks will get even cheaper. Value managers are not often wrong, but nearly always early.

Risk

A quietly aggressive value driven fund looking outside the mainstream “safe” large-cap UK income generating equities. As a result there is the possibility of company failures and disappointments where the catalyst for change just does not arrive. Currently they also hold 15% in overseas stocks.

Our Opinion

This income fund has been run by the same lead managers since 2010, with continuity of process and a consistent track record. Their process can lead to shorter periods of underperformance but their core discipline of buying cheap stocks gives good long-term outperformance and a good income.

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