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SCHRODER UK DYNAMIC SMALLER COMPANIES A - Fund overview

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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% 0.00%

Fund summary

Sector  UK Smaller Companies
Product type  OEIC
Launched  August, 1996
Size  £896m
Yield 0.1%
Charging basis  Income
Dividends paid  Acc units only.
Bid price 295.60p -11.00p

Fund 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%
Reduction in yield (10yr) 1.67%

Bestinvest says


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

schroder uk dynamic smaller companies a asset allocation illustration
Allocation Proportion
Equity 101%
High yield bonds 0%
Quality bonds 0%
Property 0%
Commodities 0%
Hedge 0%
Fund cash -1%
schroder uk dynamic smaller companies a equity geographic illustration
Allocation Proportion
UK 98%
Europe 1%
Nth America 1%
Japan 0%
Pacific 0%
Other Equity 0%
schroder uk dynamic smaller companies a equity capitalisation illustration
Allocation Proportion
Large Caps 0%
Mid Caps 4%
Small Caps 96%

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.

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