Schroder Australian Equity Fund

Investment Objective

To outperform the S&P/ASX 200 Accumulation Index over the medium to long term.

The Fund offers investors access to a professionally managed portfolio of predominately Australian securities.

Investment philosophy and process

The core of Schroders investment philosophy is that companies reinvesting in their businesses at higher rates of return will be rewarded with better than average long term share price performance. 

Our philosophy is based around the belief that corporate value creation, or the ability to generate returns on capital higher than the cost of capital, leads to sustainable share price outperformance in the long term. The ability to generate superior returns is a function of industry dynamics and company competitive advantage.  The process is a combination of qualitative industry and company competitive position analysis and quantitative financial forecasts and valuations

The key stages of our investment process are as follows:

Step 1. Industry and company assessment
Schroders begin with a detailed strategic assessment of the industry dynamics with the objective of identifying those companies with the greatest long term sustainable advantage.

Step 2. Classification
Securities are next classified according to their ability to generate returns on capital.  The stock classification guidelines set a tight framework for portfolio construction, ensuring our commitment to quality is maintained.

Step 3. Valuation
Valuations are focused on company cash flow and are tested under a range of scenarios.  Implicit within the valuation step is the identification of key drivers of revenue, margins, returns and macroeconomics sensitivities.

Step 4. Portfolio construction
Stock rankings provide an indication of the most favoured opportunities.  Our most active positions will be in highly ranked companies with the strongest growth prospects.  Diversification and risk control versus the investment objective are also important factors in determining what and how much of a stock to buy.  Analysts take an active role in the consideration of portfolio inclusions, exclusions and relative weights with final positions the responsibility of the senior portfolio manager.

For more information about Schroders' Australian Equities management capabilities, including Fund reports and performance, please click on the relevant link: