Business Cycle


Business cycle approach





OVERWEIGHT
MARKET
UNDERWEIGHT

Growth

Growth Defensives

Value Defensives

Financials

Consumer cyclicals

Commodity cyclicals

Industrial cyclicals

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

goods

technology

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


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



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



Estate
Revenues reliant on consumer spending.
Includes:

builders


Leisure
Revenues linked either directly or indirectly to a commodity product.
Such as:


Mining

chemicals
Manufacturing capital goods or with revenues linked to industrial production.
Includes:



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.
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
Head of Business Cycle

Schroders
career
commenced
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
Fund Manager, Schroder European Opportunities Fund

Schroders
career
commenced
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
Fund Manager, Schroder European Alpha Income Fund

Schroders
career
commenced
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:
The fund aims to provide capital growth and income. At least 80% of the fund will be invested in shares of large and medium-sized European companies, excluding the UK.
The fund aims to provide capital growth. At least 80% of the fund will be invested in shares of large and medium-sized European companies, excluding the UK.
The fund aims to provide capital growth and income. At least 80% of the fund will be invested in shares of UK companies.
The fund aims to provide capital growth and income. At least 80% of the fund will be invested in shares of large and medium-sized UK companies.
What are the risks?
- 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 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.
- Where a fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall.
- Funds which invest in a smaller number of stocks can carry more risk than funds spread across a larger number of companies. Investments in smaller companies can be less liquid than investments in larger companies and price swings may therefore be greater than in larger company funds.
- Typically, UK authorised collective investment schemes invest on a 'long-only' basis. This means that they will rise (or fall) in value based on the market value of the assets they hold.
- Absolute return strategies employ synthetic shorting techniques to establish both 'long' and "short" investments. As a result, as well as holding assets that may fall or rise with market values, they will also hold positions that will rise in value as the market falls and fall in value as the market rises. Therefore, absolute return funds are referred to as 'long/short' funds. These funds may use derivatives and forward transactions for investment purposes.
- This involves special risks which may significantly raise the risk profile of a fund and increase its volatility when taking additional market or securities exposure.