News releases

Schroder UK Alpha Plus celebrates tenth anniversary with top decile performance

11/07/2012

Richard Buxton has marked his tenth year as manager of the Schroder UK Alpha Plus fund with a 158%* return on top of the original investment, ranking it in the top decile of the IMA UK All Companies sector.

The fund, which launched on 5th July 2002, has delivered a return equivalent to approximately 10% per annum against 6.4% per annum for the FTSE All Share Index**.

Buxton created the fund based on his belief that after the strong bull market of the 1980s and 1990s, the UK stockmarket was likely to move broadly sideways for ten or fifteen years.

“Unfortunately my prediction was largely correct. The market has had positive years and negative years, but overall there has been little capital growth for investors,” he said.

The fund was designed to focus on around 35 stocks which represented Buxton’s highest conviction ideas.

“During periods of strong gains for share prices, a rising tide lifts all boats. But in a market with little direction you must focus on a smaller number of potential winners,” he said.

This has meant that the Schroder UK Alpha Plus fund is more volatile than a more diversified or index fund, but returns over many years have rewarded the longer term investor.

Looking ahead, Buxton believes we are not out of the broad sideways trading range yet.

“It has been four years since the financial crisis, but history suggests it takes at least six years for banks to work out their losses after a crisis. Banks, governments and individuals have too much debt and need to retrench, so economic growth will be low,” he said.

“Some parts of the world will grow faster than the UK and the UK stockmarket is international, so many companies may benefit from this. But resolving the global debt overhang and the issues in Europe will be headwinds for some time yet.”

According to Buxton the good news is that valuations are the key to future returns – not the economic outlook.

“From a starting point ten years ago of a price/earnings ratio above 20x, one would have struggled to make money from equities even if the macro-economic environment had been a panacea,” he said.

“If history is any guide, then from today’s valuation of 10x earnings, the next ten years could see double-digit real returns, despite the economic headwinds we face. I’m more optimistic about returns from UK equities over the coming decade than I was at launch in 2002, even if we remain volatile for the next few years.”

For further information, please contact:

Charlotte Banks Tel: +44 (0)20 7658 2589/charlotte.banks@schroders.com

Notes to Editors

*As of 5th July 2012

Source: Morningstar, Bid to Bid basis

**5th July 2002-5th July 2012

Source: Morningstar, Bid to Bid basis

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Schroders plc

Schroders is a global asset management company with £199.6 billion (€238.9 billion, $310.1 billion) under management as at 31 March, 2012. Our clients are major financial institutions including pension funds, banks and insurance companies, local and public authorities, governments, charities, high net worth individuals and retail investors.

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Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.

Funds which invest in a smaller number of stocks can carry more risk than funds spread across a larger number of companies.

Funds that invest solely in the companies of one country or region can carry more risk than funds spread over a number of countries or regions.

The fund is not tied to replicating a benchmark and holdings can therefore vary from those in the index quoted. For this reason the comparison index should be used for reference only.

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