Schroder Asian Alpha Plus
Schroder Asian Alpha Plus has a flexible approach with few formal constraints. The manager looks to exploit stock market inefficiencies, and use some macro input, to build a concentrated portfolio of predominantly larger companies from the Asian region. Long-term manager Matthew Dobbs has recently retired and handed over duties to Richard Sennitt, who has been involved in the fund for a number of years. The investment approach has not changed.
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Richard Sennitt, Co-Manager Richard Sennitt joined Schroders in 1993 and has been managing the Schroder Asian Income Fund since its launch in 2006, demonstrating a strong track record in Asian markets. In addition to managing income-focused funds, Richard has collaborated with Matthew on growth-oriented funds for 13 years.
Abbas Barkhordar, Co-Manager Abbas joined Schroders as a graduate and has been with the firm for 13 years, contributing significantly to the Emerging Markets team under Tom Wilson. He began as an Emerging Markets strategist and is now a Frontier Markets Specialist.
Richard Sennitt, Co-Manager Richard Sennitt joined Schroders in 1993 and has been managing the Schroder Asian Income Fund since its launch in 2006, demonstrating a strong track record in Asian markets. In addition to managing income-focused funds, Richard has collaborated with Matthew on growth-oriented funds for 13 years.
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Investment process
Schroders believes markets are inefficient and that it is easiest to capture the inefficiencies at the stock level, where in-depth proprietary research can provide considerable information advantage. The manager believes long-term returns are driven by valuation considerations, but he is willing to exploit other opportunities if the investment case is strong enough. Ideas are sourced from Schroders' huge regional analyst team, brokers and the manager himself. He then invests in the best 50-70 non-consensus ideas. He will also consider other, more qualitative factors, such as barriers to entry and strength of management.
Risk
Schroder Asian Alpha Plus typically has a similar volatility to that of the index, although it is unashamedly unconstrained. Risk is managed at a stock level and the manager avoids taking very large positions in more volatile companies. The manager does a lot of due diligence, puts a heavy emphasis on corporate governance and tries to invest in the right management teams to protect investors. Investors should also be aware of the currency risk.
ESG
ESG - Integrated
ESG factors are integrated throughout the investment process for the whole of the Schroders fund range. The process begins with the ‘SustainEx’ tool which has been developed in-house by a 25-strong central ESG team.
SustainEx quantifies the positive and negative impacts companies have on society. It has won a number of awards and continues to be upgraded all the time. Most approaches measure impact relative to a benchmark, whereas SustainEx calculates a quantifiable overall impact. There are over 45 positive and negative externalities which have been drawn from over 400 academic studies and are applied to 9,000 global companies. The tool helps fund managers to identify previously unaccounted for ESG risks and helps them to build these risks into their valuation framework. Each individual strategy has its own ESG specialist on the team.
In addition to SustainEx, analysts also use the Context tool which allows them to add their own input. It is also used in the valuation process, with higher discount rates applied to weak ESG companies. Some companies’ ESG will be so weak that they are considered uninvestable. ESG also helps shape portfolio construction: those stocks with a higher ESG risk may have a reduced weight in the portfolio, or if the risk is high enough, no position at all.
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