QEP Global Blend
The QEP Global Blend strategy seeks to produce a long run return of +3% per annum (gross of fees) above the MSCI All Country World Index or comparable global benchmarks.
Schroder QEP Global Blend is an index-unconstrained strategy designed to deliver higher long-run returns than the market. Analyzing a universe of over 15,000 companies, the team constructs a highly diversified portfolio typically containing over 400 stocks.
Stock selection for this strategy is grounded in the analysis of company fundamentals indicating Value and Quality. The advantage of investing in both Value and Quality is that, while both tend to outperform over time, they deliver their returns at different stages of the economic cycle, creating the potential for outperformance across a broad range of market environments.
We believe that intelligent portfolio construction can greatly enhance the ability to generate repeatable long-run returns. We reduce stock specific risk by building a highly diversified portfolio, but with conviction in every single stock. Recognizing the limitations of market cap-weighted indices, we take an index-unconstrained approach which enables us to invest wherever we find the best Value or Quality opportunities and to capitalize upon those which may be missed by other managers.
The QEP team have been managing global equity portfolios since 2000. They use an investment philosophy that is based upon combining fundamental data and well-researched behavioral insights, placing considerable emphasis on portfolio construction and genuine diversification of risk.
There are three distinct components to the QEP team’s investment philosophy:
- All stock selection is focused on two key fundamental drivers of long-run equity returns: stock valuations and business quality (as defined by measures of Profitability, Stability and Financial Strength).
- We then use quantitative models to ‘scale up’ our process, which allows us to access the best opportunities across a broad global universe. These tools enable us to maximize the opportunity set and re-balance portfolios in a disciplined way as opportunities evolve
- Finally, experienced investors are responsible for implementing every trade decision, ensuring proper diversification and seeking to identify future risks and return opportunities.
The investment process of the QEP Global Blend strategy can be summarized in three stages:
Source: Schroders. 1 Internal guidelines only and are subject to change.
The QEP Investment team has spent a great percentage of their time involved in investment strategy and forward-looking research aimed at enhancing the team’s products in order to capture more of the forthcoming opportunities and avoid more of the looming risks. The team’s investment process uses proprietary models and is driven by insights developed and researched internally by the team. This leads us to believe that our investment philosophy and approach to investing will deliver on-going success into the future.
Active stock selection focused on valuations and business quality
Our stock-selection framework starts with two clear fundamental drivers: company valuations and business quality. We believe these two characteristics are the key drivers of long-run equity returns, however defining these attributes requires careful consideration and will differ across industries. Our research focuses on understanding the economic drivers of different industries and utilizing value and quality measures to target companies with desirable attributes that we believe will outperform in the future.
Allocating capital efficiently across a broad opportunity set.
We believe that allocating capital efficiently is critical to exploiting alpha opportunities and enhancing consistency of returns. Our research has highlighted that allocating capital based on stock fundamentals, transaction cost and other risks (including country risks) can led to outperformance over a market capitalization weighted index over the longer term. This on-going research feeds our proprietary stock weighting program which is integrated into our allocator. In this model we take into account fundamental risk (from our non-parametric stock selection models), transaction costs (through our market impact model) and other risks (including from our QEP Country risk model and assessment of Environmental, Social and Governance (ESG) risks).
This on-going research leads us to believe that our approach enhances our allocation of capital across a broad universe improving the consistency in alpha generation and will continue into the future.
- Separate Accounts