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A way for individual investors to pool their money together, allowing them to invest in assets that would otherwise be unobtainable
The person who decides where the fund's money should be invested. As such, finding a talented manager (such as those with a Citywire rating) is of paramount importance
Funds are grouped together into sectors, allowing fund managers to be judged against their benchmarks and peer group. Each sector has rules about what assets funds are allowed to invest in
A generic term meaning 'what you own'. If you can buy it, it's an asset. In the world of investments the most common assets are shares, bonds, property and cash.
A group of assets with similar properties. For example, while shares will rise or fall in price individually, economic factors can affect all shares similarly. The same economic factors might affect bonds very differently – so shares and bonds are separate asset classes.
The process of deciding which asset classes to invest in. Successful asset allocation is often more important than selecting individual assets (for example deciding whether to invest mainly in shares, rather than which shares to invest in). Since most fund managers are tied to their sector rules, you need to either do your own asset allocation or buy a managed fund.
A measure of how different areas of the markets are performing, against which funds can be compared. For example, a fund in the UK All Companies sector might be compared against the FTSE All-Share index of every company traded on the London Stock Exchange. A good fund manager will be able to beat the benchmark most of the time, but very few can.
A contract representing something of financial value. Shares and bonds are the most common types of securities.
Unlike most funds, which are restricted to investing in particular markets by the rules of their sector, managed funds can invest in just about anything. While they can have subtly different objectives, they are split into 'Active Managed', where the manager is given free reign; 'Balanced Managed', where the manager can invest a maximum of 85% in shares to reduce risk; and 'Cautious Managed' with a 60% maximum in shares.
A share in a company represents part ownership of its assets (e.g. its buildings, intellectual property and so on) and its future income (paid out as dividends). The value of a share depends largely on other investors' expectations of the company's future growth and income.
Companies can issue bonds as a way of raising money. When you buy a bond, the company is agreeing to pay you a fixed income (hence the alternative name 'fixed income securities') for a certain time period, after which your money is repaid. If investors suspect a company may be unable to repay, they will demand a higher income or 'yield' - hence 'high yield bonds'.
In investing, 'risk' can refer to different things, but essentially means the possibility that your objectives won't be met. In this context, risk is a calculation of the 'standard deviation' of returns each month – in otherwords, a measure of how rocky the returns are. The higher the rank, the less risk the fund takes with your money.
This is a way of calculating 'risk adjusted returns' – i.e. how much value the fund is adding above the risk it takes to generate its returns. The higher the number the better.
A measure of how your investments have performed, relative to your initial investment. For example if you invest £1,000 in a fund, and a year later your investment is worth £1,100, you've made a 10% return.
Comparing the maximum loss for different managers (or between a manager and their benchmarks, as on these factsheets) over a given period is a good way of seeing who's doing the best job of safeguarding investors' money. Otherwise known as maximum 'drawdown', this is a measure of how much you would lose if you bought an investment at its most expensive and sold at its cheapest. For example if a fund was worth £1 a unit at one point but then fell to 50p – regardless of what happened in the meantime – the fund's loss would be 50%.
updated on 06/12/2013
CHANGE IN PRICE
over 3 years to 06/12/2013
TOTAL RETURN over 1 month to 06/12/2013
Schroder Income Benchmark
Who runs this fund?
How this fund has performed overView full chart tool
Maximum loss on £1000
How Schroder Income compares to the sector over
How has Schroder Income performed?
How Schroder Income compares to the sector over
Sectors: What is this fund investing in? Updated 31-08-2011
Top 10 holdings Updated 30-06-2013
News about: Schroder Income
- Launch Date 01 Nov 1968
- Fund size () £571m
- Base Currency GBP
- ISIN GB0007648909
- Minimum initial investment £1000
- Minimum additional investment N/A
- Annual management charge1.5%
- Initial charge3.3%
Schroder Income's Nick Kirrage says it is still too early to buy back into miners, but he is finding attractive value plays in the beaten up US tech and defence sectors.
Kirrage acknowledges that it is becoming harder to find good income sources within the UK and is currently selling selective fund positions to lock in gains.
Kirrage and co-manager Kevin Murphy focus on more than just the current dividend a company is paying and are inclined to avoid the very highest paying divided payers if they don’t believe in their long term fundamentals.
Kirrage told Citywire Selection: ‘We would rather sell positions and let cash go up which has been a drag on the portfolio for the last six months but [over] the long term this works for us’.
Finding limited opportunities in the UK has made the pair look for opportunities outside the UK in the search for better income potential and the pair are currently 15% invested overseas with a strong focus on US tech stocks.
Within the last six months they have bought Dell and Hewlett Packard on the back of news of the takeover bid made by Dell.
Displaying their long held contrarian deep value approach, they have initiated a position in SAIC, the American defence company.
He admits that a market sentiment towards these types of company is quite poor and that many in the defence sectors had been sold down over anticipated cuts in government defence spending.
He said ‘SAIC has a very strong balance sheet and limited debt. The business [is diversified] and has recently paid a special dividend so the world is not ending for them’.
Kirrage is happy to stick with his disciplined deep value approach even if it does not pay off over the short term.
‘We may look stupid for three years for going into these stocks but then the stock will perform and we will look clever again’.
Miners and commodities tempting
They continue to shun miners as valuations have not come down enough for them. He admits mining has been strong recently but is watching closely
He is looking closely at Anglo American, which is the world’s largest producer of platinum. Although prices of platinum have recently taken a ‘beating’ he likes the stock for its ‘deep value’.
‘We are value and income obsessed and will happily get into bed with miners when prices look more attractive’.
Since the turn of the year, the duo have trimmed a number of positions within consumer facing stocks. They have sold down electrical retailer DSG International and have recycled the proceeds into Debenhams.
‘At one point Dixons was one of the biggest positions in the fund but this was not right as it is not as low risk as AstraZeneca’
Elsewhere within the consumer space, they have also trimmed Next by taking advantage of the huge increase in share price. The stock went from £9 when they bought to its current level at around £45.
Healthcare and Financials
While he admits that Pharma is not cheap it continues to be one of the strongest drivers of performance and backs pharmaceutical giants AstraZaenca and GlaxoSmithKline which remain the biggest holdings of the fund at 6.0% and 4.8% respectively.
The duo also remain bullish on financials and continue to hold Legal and General and RBS.
‘Financials is no longer the third rail it once was and we always hear about the horror stories of the effects of new regulation but it always ends up being reasonable and they [financials] pay great dividends.’
Over the five years to the end of May the fund has returned 65.9% easily outstripping the FTSE 350 Higher Yield TR benchmark return of 32.9%.
Citywire Selection Verdict: Deep value investors, Nick Kirrage and Kevin Murphy have a rigorous process of finding the best value firms through intense analysis of company balance sheets. They continue to shun tobacco and mining companies in favour of both financials and healthcare stocks. The duo run a low turnover portfolio and look out for companies who have experienced a short-term setback in order to buy in when it is cheap and to later reap the rewards. Their contrarian approach is not for the faint hearted and short term volatility is present. This is a pick for those who are able to take the short term volatility in order to reap the long term rewards.
For more details view the latest factsheet .
What is Citywire Selection?
Citywire Selection is an investment guide containing around 150 of the best ways to invest in a range of areas, as chosen by our research team using a rigorous and transparent process.
We don't sell funds, so you can trust the independence of our recommendations.
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