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SCHRODER UK DYNAMIC SMALLER COMPANIES A

SCHRODER UK DYNAMIC SMALLER COMPANIES A - Overview

Overview of SCHRODER UK DYNAMIC SMALLER COMPANIES A

The fund targets long term capital growth through investment primarily in the equities of small UK companies. The portfolio is spread widely across the investment universe, defined as the bottom 10% of the UK market by capitalisation, including AiM. Manager Paul Marriage favours profitable, cash generative companies, ideally with intellectual property and their own market niche. The fund was hard closed on 22 Jan 2014.

  • Standard Initial Charge 0.00%
  • Initial charge via Bestinvest 0.00%

Fund summary

Sector UK Smaller Companies
Structure OEIC
Launched August, 1996
Size £665m
Yield 0.1%
Charging basis Income
Dividends paid Acc units only.

Charges

Standard initial charge 0.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 1.50%
Total expense ratio 1.67%

Risks

Before investing make sure you have understood the risks relevant to the fund by reviewing our Risk Warnings section. Further information on the risks are contained in the fund's Key Investor Information Document, which we make available to you before you make a decision to invest, alternatively it is available on request.

Bestinvest view

Paul Marriage has generated substantial outperformance in a variety of market conditions since taking control of this fund in 2006, though he has proved particularly effective during falling markets. He takes a common sense approach, generally looking for good businesses but also for an investment angle that will cause their share price to be re-rated. He is also pragmatic enough to include poor quality companies in the portfolio if he believes they are sufficiently undervalued.

Portfolio

Allocation Proportion(%)
Equity 101
High yield bonds 0
Quality bonds 0
Property 0
Commodities 0
Hedge 0
Fund cash -1
Allocation Proportion(%)
UK 98
Europe 1
North America 1
Japan 0
Pacific 0
Other Equity 0
Allocation Proportion(%)
Large Caps 0
Mid Caps 4
Small Caps 96

View all performance data for this fund

Investment process

The fund is constructed using an entirely bottom-up process; sector positioning is not a focus. The portfolio is spread widely across the investment universe, defined as the bottom 10% of the small-cap market by capitalisation, including AiM. The manager aims to have 75% of the portfolio in core holdings matching his "P3M criteria": Product – a differentiated product, R&D backed and preferably with intellectual property. Market – a market leader, either for the UK in a large niche or globally in a small niche. Margin – profitable, cash generative companies that are growing margins. Management - Marriage looks for management that appreciates shareholders and own their own stock. He likes to meet each portfolio company twice a year, ideally on their own premises. The remaining 25% of the portfolio is invested in value situations, often "poor" companies that the market has mis-priced. Regardless of the company he also requires an "investment angle" - a catalyst such as a restructuring that will cause an uplift in the share price. Ideas are sourced from market knowledge gained at company meetings, the "library" of companies Marriage has met in previous years, fundamental research and from regional brokers. The roles of fund manager and analyst are combined, without the need for large teams of sector specific analysts.

Live feed

Bid price(inc) (-30.40p) 276.20p
Accum units 276.20p
Fund commentary 30/05/14
Fund data updated on 16/12/14

* This fund is part of our annual bonus scheme to which conditions apply. If you qualify for the bonus it will be paid on any holding of this fund that you have in your Investment, ISA or SIPP accounts.

Asset allocation

Allocation Proportion(%)
Equity 101
High yield bonds 0
Quality bonds 0
Property 0
Commodities 0
Hedge 0
Fund cash -1

Equity Geographic

Allocation Proportion(%)
UK 98
Europe 1
North America 1
Japan 0
Pacific 0
Other Equity 0

Equity Capitalisation

Allocation Propor
tion(%)
Large Caps 0
Mid Caps 4
Small Caps 96

Top 10 holdings

As at: 30/09/2014
3.36% Smart Metering Systems Plc
3.27% Johnson Service Group Plc
3.18% Clinigen Group Plc
3.11% Stock Spirits Group Plc
2.78% British Polythene Industries
2.75% Wincanton
2.33% Pendragon Plc
2.3% Servelec Group Plc
2.29% Vertu Motors Plc
2.29% Telford Homes
Source: Trustnet

Sector breakdown

Industrials 37%
Consumer Services 19%
Consumer Goods 14%
Technology 13%
Financials 7%
Health Care 7%
Basic Materials 3%
Oil & Gas 2%
Money Market -3%

Portfolio details

Target of 80 core holdings. Max 5% in one stock. Max Schroder ownership in any company is kept at 30%. No exposure to oil, gas, mining or non UK listed stocks.

Constraints

Position size between 1%-5%.
The portfolio usually has very little commonality with the benchmark and so performance can be expected to differ markedly on occasions.

Average monthly relative returns Bestinvest MRI
09/10 10/11 11/12 12/13 13/14   3 years 5 years Career 3 years 5 years Career
0.28% 0.60% 0.70% 0.69% -0.54%   0.28% 0.34% 0.34% 87.50% 92.70% 98.70%
Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

Paul Marriage

Manager. Marriage joined Cazenove Capital in 2005 where he is a member of the pan-European equity team with research responsibilities for smaller companies sector. He previously worked for Insight from January 1998, initially as an Analyst researching UK smaller companies and from March 2003 as manager of their UK Small Company funds. After graduating he joined Willis Group, the Global Risk Management Consultants, as a Reinsurance Broker for energy companies. He then moved into investment management with Creditanstalt, an Austrian bank, as an Eastern European Equity Analyst. He is a graduate of University College, Oxford with a degree in Modern History and is an Associate of the Society of Investment Professionals (ASIP).

Track record

Paul Marriage has 11.5 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.34%. During the worst period of relative performance (from June 2008 - March 2009) there was a decline of 16% relative to the index. The worst absolute loss has been 55%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is 99%.

Periods of worst performance
Absolute -55% (May 2007 - February 2009)
Relative -16% (June 2008 - March 2009)

Other funds managed

Sector record since March 2003 (12 yrs)




About the MRI

Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.

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