At a time when investment markets are in flux and a rotation from growth to value is evident, investors may need to look beyond trends or themes and focus on the fundamental value of companies to generate returns.
The Schroder Global Recovery Fund focuses on companies with classic recovery characteristics. That is, businesses that have suffered a setback in either profits or share price, but where long-term prospects are believed to be good and, therefore, potential shareholder returns are attractive. Recovery investments can be ‘out of favour’ for many reasons, including weak short-term profitability, economic concerns or an under-strength balance sheet. Most investors will focus heavily on the bad news, but even in the most challenging economic times insolvency is rare. Historically, the market underestimates the ability of businesses to improve their situations over time and, as a result, investors willing to take a long-term investment view can benefit from very strong returns. This style of investing’s major strength is the disciplined focus on buying attractively valued, out-of-favour companies at all stages in the investment cycle.
Holding value stocks in a portfolio is key to diversifying from growth stocks and future-proofing investment portfolios against varying market cycles.
Valuation dispersion within the market – the gap in fundamental valuation between the most expensive and cheapest shares – remains at extreme levels today.
The Fund is differentiated by offering investors exposure to companies with pure deep value ‘recovery’ characteristics.
Many investor portfolios lack style diversification. An allocation to value stocks provides investors with diversification throughout different market cycles.
A team of eight investment professionals, responsible for £12.4bn assets with an active value investment strategy and a contrarian and proven approach to investing.
The fund aims to provide capital growth in excess of the MSCI World (Net Total Return) Index (post-fees) over the medium to long term. This is delivered by investing in equity and equity- related securities of companies worldwide which are considered to be undervalued relative to their long-term earnings potential.
The fund may be suitable for:
This product is likely to be appropriate for a consumer seeking capital growth for a small component of their portfolio, with a high or very high risk and return profile. This product is unlikely to be suitable for a consumer seeking capital preservation or with a short investment timeframe.
Schroders is a world-class asset manager operating from 37 locations across Europe, the Americas, Asia, the Middle East and Africa.