Business Cycle

Business cycle approach

Our distinctive business cycle approach helps our fund managers identify the stock that are most likely to outperform as the economy moves through each stage of the cycle; expansion, slowdown, recession and recovery.
Depending on the phase, the share price performance of different types of companies will react in different ways. By identifying the current stage of the business cycle, we aim to anticipate and capture rich investment opportunities.
Navigate your way through each phase of the business cycle.
Business cycle graph - slowdown
Business cycle graph - recession
Business cycle graph - recovery
Business cycle graph - expansion
  • PHASE 1
  • PHASE 2
  • PHASE 3
  • PHASE 4
  • SLOWDOWN

    OVERWEIGHT

    MARKET

    UNDERWEIGHT

    Growth

    Growth Defensives

    Value Defensives

    Financials

    Consumer cyclicals

    Commodity cyclicals

    Industrial cyclicals

    Growth

    Revenues well in excess of GDP with a high degree of uncertainty or volatility.

    Includes:

    Luxury
    goods
    Medical
    technology
    IT

    Grow revenues in excess of GDP with low volatility and high visibility.

     

    Includes:

    Pharmaceuticals
    Defence

    Grow revenues at or below GDP with low volatility and high visibility.

     

    Includes:

    Telecomms & Utilities
    Food producers & retailers
    Beverages & Tobacco

    Revenues depend on interest rate spreads, financial markets and asset valuations.

    Includes:

    Banks
    Insurers
    Real
    Estate

    Revenues reliant on consumer spending.

    Includes:

    House
    builders
    Automotives
    Retail &
    Leisure

    Revenues linked either directly or indirectly to a commodity product.

    Such as:

    Oil & Gas
    Steel &
    Mining
    Bulk
    chemicals

    Manufacturing capital goods or with revenues linked to industrial production.

    Includes:

    Engineering
    Aerospace
    Construction

    The process explained

    A clear macro view combined with bottom-up stock selection

    1

    The fund manager combines a clear macro view with bottom-up stock selection driven by a thorough analysis of earnings changes, relative to the market. Analysis of the business cycle reduces the risk of stock selection by focusing on the required risk profile of the company.

    2

    At turning points in the business cycle, a change in risk appetite requires the portfolio’s beta to change substantially. This is where we add value compared to funds that are run with a 100% bottom-up stock picking approach.

    3

    We segment the stock universe into seven style groups; growth, growth defensive, value defensive, financials, consumer cyclicals, commodity cyclicals and industrial cyclicals.

    4

    The portfolio will be tilted towards the style groups which are appropriate for the current phase of the business cycle.

    5

    We combine our top-down macro view with bottom-up stock selection. In between turning points, we focus on earnings revisions, looking for the best opportunities.

    6

    Based on this stock selection process and where we are in the business cycle, the fund manager holds what he believes are the appropriate stocks for that phase.

       

    Meet the managers

    Matt Hudson

    Matt Hudson

    Head of Business Cycle

    Joined
    Schroders
    2013
    Investment
    career
    commenced
    2000
    citywire triple A

    Overview

    Matt leads the Business Cycle Team at Schroders. He joined the Schroders group as part of the Cazenove acquisition. Prior to Cazenove he worked for AIB Govett Investment Management. Prior to this he was a chartered accountant at PriceWaterhouseCoopers. He graduated from Cambridge University with a degree in History.

    Steve Cordell

    Steve Cordell

    Fund Manager, Schroder European Opportunities Fund

    Joined
    Schroders
    2013
    Investment
    career
    commenced
    1993
    Steve Cordell awards

    Overview

    Steve is a senior member of the Pan-European Equity team at Schroders, having joined following the acquisition of Cazenove Capital. He was at HSBC Asset Management (Europe) Ltd prior to this. He graduated from Trinity College, Oxford with a First Class (Hons) in Modern Languages. Steve is a member of the Securities Institute and has worked in the industry for over 19 years.

    James Sym

    James Sym

    Fund Manager, Schroder European Alpha Income Fund

    Joined
    Schroders
    2013
    Investment
    career
    commenced
    2008
    citywire double A

    Overview

    James is a member of the Cazenove Capital Pan-European Equity team at Schroders. He graduated from St John's College, Cambridge with a degree in Natural Science and is a Chartered Financial Analyst.

    Our funds

    The four funds using this distinct approach are:

    Source of ratings: Morningstar, Trustnet, Rayner Spencer Mills and Citywire as at 31 January 2016.