Global Small Cap Equity
Schroders Global Small Cap aims to outperform the S&P Developed Small Caps Index* by 200-300 basis points (before fees) per annum over three-year rolling cycles. We seek to add value primarily through stock selection and secondarily through regional allocation.
Schroders Global Small Cap product provides active management that seeks to identify the best investment opportunities in global equity markets. The Team believes that successful investment in smaller companies requires a separate and strategic allocation and should be managed by a dedicated and focused team. The Team also believes that small companies can provide potentially superior returns over the long term and, as such, may be excellent complements to mainstream, larger-cap investments.
Matthew Dobbs is the Head of Global and International Small Cap Equities with over 30 years investment experience. Small Cap focused team of over 20 professionals located in London, Tokyo, Singapore, Seoul and Hong Kong. The team draws on Schroders’ numerous firm-wide global resources, including the large cap focus list analysts, global sector specialists and macro-economic research.
Stock selection is at the core of our investment process, based on intensive in-house company analysis. We seek to identify companies offering superior and visible growth, but within a disciplined valuation framework. We also seek to add value through regional allocation.
We believe that investing in smaller companies with what we believe to be superior characteristics and that are undervalued in the market will deliver competitive investment returns. We seek to identify quality growth companies by devoting our in-house resources to identify the fundamental attractions of each company’s business model, gauging the scope and visibility of growth, the risks to that growth, and the quality and focus of its management. In appraising valuations, we aim to look further out than the market (assessing investments based on a two- to three-year time frame) and apply a disciplined fair-value methodology.
Stock selection is at the core of our investment process and the bulk of our resource and effort is dedicated to it. This approach stems from our belief that identifying undervalued companies that exhibit what we believe to be superior characteristics of visible growth and sustainable returns is the key driver of excess returns. This view is strengthened by the fact that smaller companies remain generally under-researched and that we think we can gain an information advantage through rigorous research consistently applied within a philosophical framework that is long-term, fundamentally driven and research-based.
We focus on trying to identify high-quality companies offering above-average and relatively visible earnings growth (i.e. a business model that is not overly reliant on an economic or business cycle over which management have relatively little control). The generic factors on which we concentrate in our research are listed in the table below, encompassing both quantitative attributes (such as its growth prospects, market position and source of sustainable competitive advantage) and also qualitative assessment, most critically of company management. Companies that demonstrate strengths in these areas and whose shares are on reasonable valuations are considered for inclusion in the portfolios.
The first stage of construction is reducing the small-cap universe to around 2,000 stocks that merit more detailed research. Screening tools are used to define this universe, looking for adequate liquidity and attractive attributes. We use proprietary screens to rank this universe based on three equally weighted criteria: growth, quality and valuations. This universe is further refined to a closely researched list of approximately 800 companies from which final portfolios are constructed. We endeavor to know as much as possible about each of the companies under consideration and, as such, our Research and Investment teams hold over 2,000 company meetings each year. The results of this investment process are moderately diversified portfolios, each comprising stocks in which we have the highest convictions.
- Strongly resourced team of investment professionals specializing in global small company research and investment
- Proprietary primary research conducted by Schroders offices around the world
- Cross fertilization of investment ideas between regions
- Separate Accounts
- Commingled Vehicle