Schroder ISF* QEP Global Emerging Markets
A blended approach to investingOur approach
Schroder ISF* QEP Global Emerging Markets follows an index-unconstrained strategy investing in stocks on the basis of valuations and business quality. It aims to provide capital growth and income in excess of the MSCI Emerging Markets (Net TR) Index after fees have been deducted over a three to five year period, by investing in equities of companies in emerging market countries.
Key fund information
Why invest?
- Benefits from strategic diversification between Value and Quality drivers, offering investors the potential for outperformance across a broad range of environments.
- All cap exposure; exploits a wide opportunity set, tapping into all sectors and regions.
- Innovative approach to portfolio construction combining high conviction with broad diversification.
Complementary fundamental drivers
This is a blend approach – we invest on the basis of both valuations and business quality. In the case of the former we are using fundamentals such as dividends and earnings to identify companies which we believe are undervalued by their current market price; in the case of the latter we look for quality companies by assessing measures of profitability, stability, financial strength and governance. The advantage of combining Value and Quality opportunities in a single portfolio is that while both strategies tend to outperform through time they tend to deliver their returns at different stages of the economic cycle, offering investors the potential for outperformance across a broad range of market environments.
Exploiting genuine breadth of opportunity
We maximise the opportunity set by looking beyond the index to broader investment universe. The fund is highly diversified, typically investing in over 300 stocks, which enables us to gain exposure to many more potential return opportunities in a risk-controlled way.
Intelligent portfolio construction
Our process is focused on delivering returns through stock selection, with minimal topdown constraints, enabling us to invest wherever we find the best opportunities. Moreover, by weighting stocks based on their fundamentals and not their size, our portfolios express genuine conviction and are not forced to hold higher weightings in more expensive stocks or index heavyweights. Our portfolio construction tools allow us to manage the risk-return trade-off efficiently and we also focus on cost-effective implementation. In addition, an understanding of the risks involved in investing in different countries is critical, particularly in emerging markets. We monitor and manage our portfolios’ exposures using a proprietary Country Risk Model which looks at factors such as currency strength, risk of default, economic growth and political and ESG risks.
Meet the managers
Risk considerations
*Schroder International Selection Fund is referred to as Schroder ISF.
- Counterparty risk: The fund may have contractual agreements with counterparties. If a counterparty is unable to fulfil their obligations, the sum that they owe to the fund may be lost in part or in whole.
- Currency risk: The fund may lose value as a result of movements in foreign exchange rates.
- Derivatives risk – efficient portfolio management: Derivatives may be used to manage the portfolio efficiently. A derivative may not perform as expected, may create losses greater than the cost of the derivative and may result in losses to the fund.
- Emerging markets & frontier risk: Emerging markets, and especially frontier markets, generally carry greater political, legal, counterparty, operational and liquidity risk than developed markets.
- Higher volatility risk: The price of this fund may be volatile as it may take higher risks in search of higher rewards.
- IBOR risk: The transition of the financial markets away from the use of interbank offered rates (IBORs) to alternative reference rates may impact the valuation of certain holdings and disrupt liquidity in certain instruments. This may impact the investment performance of the fund.
- Liquidity risk: In difficult market conditions, the fund may not be able to sell a security for full value or at all. This could affect performance and could cause the fund to defer or suspend redemptions of its shares.
- Market risk: The value of investments can go up and down and an investor may not get back the amount initially invested.
- Operational risk: Operational processes, including those related to the safekeeping of assets, may fail. This may result in losses to the fund.
- Performance risk: Investment objectives express an intended result but there is no guarantee that such a result will be achieved. Depending on market conditions and the macro economic environment, investment objectives may become more difficult to achieve.
Important information:
For professional investors and advisers only. The material is not suitable for retail clients. We define "Professional Investors" as those who have the appropriate expertise and knowledge e.g. asset managers, distributors and financial intermediaries
This information is a marketing communication. This information is not an offer, solicitation or recommendation to buy or sell any financial instrument or to adopt any investment strategy. Information herein is believed to be reliable but we do not warrant its completeness or accuracy. Schroders has expressed its own views and opinions in this document and these may change. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of any overseas investments to rise or fall. Past Performance is not a guide to future performance and may not be repeated. This document does not constitute an offer to anyone, or a solicitation by anyone, to subscribe for shares of Schroder International Selection Fund (the “Company”). Nothing in this document should be construed as advice and is therefore not a recommendation to buy or sell shares.
Subscriptions for shares of the Company can only be made on the basis of its latest Key Investor Information Document and prospectus, together with the latest audited annual report (and subsequent unaudited semi-annual report, if published), copies of which can be obtained, free of charge, from Schroder Investment Management (Europe) S.A.
Issued in March 2023 by Schroders Investment Management Ltd registration number: 01893220 (Incorporated in England and Wales) is authorised and regulated in the UK by the Financial Conduct Authority and an authorised financial services provider in South Africa FSP No: 48998.