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A way for individual investors to pool their money together, allowing them to invest in assets that would otherwise be unobtainable
The person who decides where the fund's money should be invested. As such, finding a talented manager (such as those with a Citywire rating) is of paramount importance
Funds are grouped together into sectors, allowing fund managers to be judged against their benchmarks and peer group. Each sector has rules about what assets funds are allowed to invest in
A generic term meaning 'what you own'. If you can buy it, it's an asset. In the world of investments the most common assets are shares, bonds, property and cash.
A group of assets with similar properties. For example, while shares will rise or fall in price individually, economic factors can affect all shares similarly. The same economic factors might affect bonds very differently – so shares and bonds are separate asset classes.
The process of deciding which asset classes to invest in. Successful asset allocation is often more important than selecting individual assets (for example deciding whether to invest mainly in shares, rather than which shares to invest in). Since most fund managers are tied to their sector rules, you need to either do your own asset allocation or buy a managed fund.
A measure of how different areas of the markets are performing, against which funds can be compared. For example, a fund in the UK All Companies sector might be compared against the FTSE All-Share index of every company traded on the London Stock Exchange. A good fund manager will be able to beat the benchmark most of the time, but very few can.
A contract representing something of financial value. Shares and bonds are the most common types of securities.
Unlike most funds, which are restricted to investing in particular markets by the rules of their sector, managed funds can invest in just about anything. While they can have subtly different objectives, they are split into 'Active Managed', where the manager is given free reign; 'Balanced Managed', where the manager can invest a maximum of 85% in shares to reduce risk; and 'Cautious Managed' with a 60% maximum in shares.
A share in a company represents part ownership of its assets (e.g. its buildings, intellectual property and so on) and its future income (paid out as dividends). The value of a share depends largely on other investors' expectations of the company's future growth and income.
Companies can issue bonds as a way of raising money. When you buy a bond, the company is agreeing to pay you a fixed income (hence the alternative name 'fixed income securities') for a certain time period, after which your money is repaid. If investors suspect a company may be unable to repay, they will demand a higher income or 'yield' - hence 'high yield bonds'.
In investing, 'risk' can refer to different things, but essentially means the possibility that your objectives won't be met. In this context, risk is a calculation of the 'standard deviation' of returns each month – in otherwords, a measure of how rocky the returns are. The higher the rank, the less risk the fund takes with your money.
This is a way of calculating 'risk adjusted returns' – i.e. how much value the fund is adding above the risk it takes to generate its returns. The higher the number the better.
A measure of how your investments have performed, relative to your initial investment. For example if you invest £1,000 in a fund, and a year later your investment is worth £1,100, you've made a 10% return.
Comparing the maximum loss for different managers (or between a manager and their benchmarks, as on these factsheets) over a given period is a good way of seeing who's doing the best job of safeguarding investors' money. Otherwise known as maximum 'drawdown', this is a measure of how much you would lose if you bought an investment at its most expensive and sold at its cheapest. For example if a fund was worth £1 a unit at one point but then fell to 50p – regardless of what happened in the meantime – the fund's loss would be 50%.
updated on 23/05/2013
CHANGE IN PRICE
over 3 years to 23/05/2013
TOTAL RETURN over 1 month to 23/05/2013
Schroder Income Benchmark
Who runs this fund?
How this fund has performed overView full chart tool
Maximum loss on £1000
How Schroder Income compares to the sector over
How has Schroder Income performed?
How Schroder Income compares to the sector over
News about: Schroder Income
- Launch Date 05 Nov 1968
- Fund size (A Acc) £645.1m
- Base Currency GBX
- ISIN GB0007649196
- Minimum initial investment £1000
- Minimum additional investment £500
- Annual management charge1.5%
- Initial charge3.3%
by Matthew Goodburn on Apr 04, 2013 at 09:14
Schroder Income manager Kevin Murphy is looking to trim a number of consumer facing stocks that have rallied hard over the past year and is mulling whether they are still worth their place in the £1.3 billion fund.
Murphy and co-manager Nick Kirrage applied their disciplined contrarian value approach to buy companies like media groups Trinity Mirror and Daily Mail, housebuilder Taylor Wimpey and packaging firm DS Smith when they were trading close to historic lows three to four years ago, but all have now rallied strongly.
Murphy told Citywire Selection: ‘We got in when they were extremely cheap and the market was discounting the worst but we have to work hard to make sure the positions still reflect the risk. We still see some upside but many of these stocks are now almost too big.’
Reducing industrials exposure
Murphy is wary of certain areas of the market that he believes have many companies trading ‘as if the world is fixed’ and for that reason has been slowly decreasing his exposure to industrials.
‘Certain areas of industrials factor in a continuation of a good economic environment but we are now underweight the sector after trimming in 2010 and 2012.’
Murphy continues to see value in banks, despite the recent negative newsflow and insists they still remain at attractive valuations.
The fund continues to hold top 10 positions in Barclays and RBS, as well as having a significant position in Lloyds. Murphy is unperturbed by news that British banks need to raise £25 billion by year end to plug an estimated capital hole of £50 billion.
‘Banks remain on attractive valuations and are still at a discount to tangible book value. There is further negative newsflow around but we already know they have to raise extra capital and they are doing so.
‘By year three they will have excess capital so the latest announcement does not change the investment case, just the timing of it.’
Elsewhere within financials, Murphy likes interdealer brokers Icap and Tullett Prebon, saying they are already well capitalised and continuing to grow their businesses in excess of GDP despite trading on relatively cheap valuations.
He tips Icap in particular to do well from new US and European legislation designed to make the disclosure of derivatives a more transparent process. Along with Tullett Prebon, Murphy thinks the market is overlooking the way they are reinventing themselves as market leading electronic trading platforms.
‘US and European post-crash regulation is changing the market place and Icap is very well placed as it has been buying tech solutions to deal with this change. Two thirds of its profits are now from electronic trading and only a third from voice activated trading.’
Murphy has also been active in his search for overseas income stocks where he admits to finding ‘significantly more’ opportunities.
‘An international base gives you 7,000 companies to screen rather than 500.’
One area where he has been increasing exposure is the beaten up US tech sector which Murphy expects to benefit from a pronounced pick up in the US domestic economy.
Dell and Hewlett Packard have been added, along with US defence and IT business SAIC, which is being restructured to focus on its two core businesses and already generates $10 billion of sales but is still a relatively small player.
Elsewhere, Murphy is continuing to shun tobacco and sees value in selective UK food retailers. He views supermarket chain Morrisons as the ‘standout opportunity’ as it was trading on the most depressed valuation, and has been adding to it regularly over the past three months to take the position to 4% of the fund.
While he believes miners are still not quite cheap enough for consideration, he continues to back pharmaceutical giants AstraZeneca and GlaxoSmithKline, which are the fund’s two biggest holdings at 6% and 4.8% respectively.
‘Astra still has strong cash generation and a strong balance sheet [while] Glaxo has a significant number of products still to come through.’
Over five years to the end of March, the fund has returned 68.7% compared to 34.6% by the FTSE 350 Higher Yield benchmark index.
Citywire Selection Verdict: 2012 was a return to form for deep value investors, Nick Kirrage and Kevin Murphy. The duo have a rigorous process of finding the best value firms through intense analysis of company balance sheets. Their overweight allocation to financials has been key to their purple patch. The fund continues to shun tobacco and mining companies in favour of both financials and healthcare stocks. While the fund has had a promising turnaround the volatility may be a bit too much for some investors and we are continuing to assess the situation.
For more details view the latest factsheet .
What is Citywire Selection?
Citywire Selection is an investment guide containing around 150 of the best ways to invest in a range of areas, as chosen by our research team using a rigorous and transparent process.
We don't sell funds, so you can trust the independence of our recommendations.
Citywire Selection Updates
Latest updates on how the funds in Citywire Selection are investing
- Littlewood dodges Japan correction and bolsters gold shelter - 23/05/2013
- Liontrust Special Situations - 21/05/2013
- Henderson Global Technology - 21/05/2013
- Ecclesiastical Higher Income - 20/05/2013
- Standard Life Investments UK Equity Unconstrained - 16/05/2013
- CF Miton Special Situations - 16/05/2013
- First State Asia Pacific Leaders - 09/05/2013
- GLG Japan Core Alpha - 08/05/2013
- Threadneedle UK Equity Income - 08/05/2013
- Investec Emerging Markets Debt - 01/05/2013
- Aberdeen Asia Pacific - 26/04/2013
- Standard Life Investments GARS fund - 17/04/2013
- Murray International Trust - 16/04/2013
- Cazenove Multi-Manager Diversity - 15/04/2013
- Allianz Gilt Yield - 11/04/2013
- Jupiter Merlin Income Portfolio - 04/04/2013
- Schroder Income - 04/04/2013
- Investec Global Bond - 29/03/2013
- Fidelity Special Situations - 29/03/2013
- Cazenove European - 29/03/2013
Portions of the information contained in this factsheet were derived by Citywire Financial Publishers Ltd using content supplied by Lipper, a Reuters Company.