fund
Schroder UK Alpha Income L
Targets both growth and income from large and mid-cap UK equities.
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37.59p
Price (Inc)
These are the shares in the fund that pay out an income to clients. The income is made up of the total dividends – the money a company can pay out to its investors – from the companies in the fund.
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50.12p
Price (Acc)
These are the shares in the fund that don’t pay out an income to clients. Any dividends – the money a company can pay out to its investors – are reinvested into companies in the fund. Despite no income, the shares should be worth more over time. Good incentive, eh?
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0.00%
Initial chargeSome funds charge you when you first invest, which is aptly known as the initial charge. They’re usually between 3-5% but at Bestinvest, we usually don’t charge you a penny!
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0.68%
Annual management charge
This is how much the fund management company charges to run the fund. It’s like paying a babysitter, dog sitter or house sitter (that makes well-informed, heavily researched changes to improve your baby/dog/house when needed).
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0.84%
Ongoing charges
This stands for Ongoing Charges Figure. It’s the cost of running a fund and includes admin fees, manager fees, administration costs, etc.
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6.80%
Yield
How much the fund is currently paying out in income to investors. It’s NOT to be confused with the overall growth of a fund – a very different thing indeed. It’s also NOT a guarantee of future pay-outs, just a snapshot. This is more what it’s not than what it is…
The fund aims to provide both capital growth and income by investing mainly in large and mid-cap UK equities. Manager Matt Hudson follows a “business cycle” approach, developed at former employer Cazenove. This involves him judging the state of the economy and then focusing on the types of companies he believes will benefit from it. For instance, he is likely to invest in more defensive companies during recessions but favour more cyclical stocks when the economy is booming.
Fund summary
| Sector | UK Equity Income |
| Structure | OEIC |
| Launched | October, 2013 |
| Size | £127m |
| Yield | 6.80% |
| Charging basis | Capital |
| Dividends paid | 28 Feb, 31 Aug |
Charges
| Standard initial charge | 0.00% |
| Initial charge via Bestinvest | 0.00% |
| Additional bid/offer spread | 0.00% |
| Annual management charge | 0.68% |
| Ongoing charges figure | 0.84% |
Allocation
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Investment process
The fund’s investment universe is primarily FTSE 100 and FTSE 250 stocks, though some smaller companies will also be included. Matt Hudson follows a top-down approach known as business cycle investing. He believes economies and markets follow a cycle and aims to judge where we are in that cycle, then tilt the portfolio towards stocks and sectors he believe will benefit from the anticipated conditions. He classifies stocks into seven types: Commodity Cyclicals, Consumer Cyclicals, Industrial Cyclicals, Financials/Interest Rate Sensitives, Growth Defensives and Value Defensives. Stocks are also broken down into three different income buckets: Premium Real Yield - which drives the core of yield in the portfolio, Capital Return - which tends to be more cyclical companies, and Dividend Growth - which tend to be companies matching the market dividend with superior growth prospects. The weights to the different stock types and income buckets will vary according to the business cycle. The process also includes bottom-up stock selection, with the importance to bottom-up and top-down varying over time. Turning points in the cycle are a catalyst for change.
The business cycle approach is reliant on the manager’s ability to call the economy correctly. However, since taking full control of this portfolio at Cazenove in 2008 Matt Hudson has proven adept at doing this in quite tricky markets, and he has maintained the approach since Schroders’ acquisition of Cazenove in 2013. There will be times that the fund's yield is lower than competitors, for example when Hudson favours more cyclical lower dividend stocks. We are also aware that it would be harder to implement the strategy with a large amount of assets in the portfolio. Nevertheless, the ability to vary the approach means that this fund offers investors something different, and we believe that it is one of the best options in the sector.
Manager research
Average monthly relative returns
- 15/16 0.00%
- 16/17 0.00%
- 17/18 0.00%
- 18/19 0.00%
- 19/20 0.00%
Bestinvest MRI
- 3 years 0.00%
- 5 years 0.00%
- Career -0.27%
- 3 years 0.00%
- 5 years 0.00%
- Career 0.00%
Performance figures are based on the average of monthly percentage returns relative to the benchmark index.
Matt Hudson
Hudson joined Schroders in 2013 following its acquisition of Cazenove, where he had worked since 2001. He is head of the Business Cycle equity team and has responsibility for equity income portfolios. He joined Cazenove from AIB Govett Investment Management where he was a UK equity fund manager. Prior to this he was a chartered accountant at PriceWaterhouseCoopers in the financial services division. Hudson graduated from Cambridge University with a degree in History.
Track record
The track record of Matt Hudson in managing mutual funds in this sector is still too short for us to draw any meaningful conclusions and so our assessment is based largely on qualitative aspects.
Periods of worst performance
| Absolute | -13.00% (July 2002 - January 2003) |
| Relative | -2.00% (July 2002 - November 2002) |
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.
Allocation
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Top 10 holdings
Data accurate as at 31 January 2020
| 7.0523% | Glaxosmithkline |
| 5.6791% | Bp |
| 4.6308% | Relx Nv |
| 3.9933% | Bhp Group Ltd |
| 3.3071% | Sse Plc |
| 3.1594% | British American Tobacco |
| 3.0639% | Lloyds Banking Group Plc |
| 2.9364% | Prudential Plc |
| 2.8468% | Severn Trent Plc |
| 2.8264% | Wpp Plc |
| Source: Trustnet |
Sector breakdown
| Financials | 22.00% |
| Consumer Discretionary | 16.00% |
| Industrials | 14.00% |
| Consumer Staples | 13.00% |
| Basic Materials | 9.00% |
| Energy | 8.00% |
| Health Care | 7.00% |
| Utilities | 6.00% |
| Real Estate | 2.00% |
| Telecommunications | 1.00% |
Portfolio
35-55 stock portfolio with a tracking error range of 4-8%.
Constraints
Max 5% stock overweight versus the index (no minimum) and max 10% sector overweight (no minimum). Max 50% mid caps, 10% in small caps/AiM. Minimum 80% UK equities.