Schroder UK Dynamic Absolute Return P2

Aims for a 10% return in all market conditions through both long and short exposure to UK equities.

  • 194.70p
    Price (Inc)

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  • -
    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?

  • 0.00%

    Initial charge

    Some 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!

  • 1.00%
    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).

  • 1.17%
    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.

  • 0.00%
    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…

Prices as at 15 January 2021, fund data last updated 17 October 2011

This fund targets a net return of 10% per annum in all market conditions by investing in UK Equities. The fund has a bias to small and mid cap stocks and the manager takes 'short' positions in stocks – to give negative exposure to companies he finds unattractive - as well as 'long' positions – buying companies he expects to rise in value. Note the gross exposure (leverage) of the fund can be up to 300%, but the normal range is likely to be between 100 - 200%.

Fund summary

Sector Targeted Absolute Return
Structure OEIC
Launched September, 2009
Size £172m
Yield 0.00%
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 1.00%
Ongoing charges figure 1.17%

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Investment process

The fund aims to achieve positive absolute returns of 10% net of fees and will not be managed against any UK equity index. To achieve this it will make full use of the UCITs III regulations, investing not only in UK equities but also in derivatives (futures & Contracts for difference (CFDs)). Additionally up to 100% of the portfolio may be in held in cash and near cash. Principally the derivatives provide both long and synthetic short positions meaning that the manager has the potential to make money not only from stocks that rise in value but also from falling stocks. Long positions will be held for a period of several years while short positions are actively traded with an average holding period of four to five months. The investment process is purely bottom up and the manager believes that this strategy is equally suitable in all economic and market environments. Quantitative tools do not drive the investment decisions and the stock selection is based solely on qualitative fundamental analysis that is conducted internally. Key characteristics that the manager looks for are a differentiated product, with the ability to grow the margin and generate cash. Each stock held will have a valuation target. The fund is not constrained by sector or industry limits.

Neil Pegrum, the co-manager of the fund, left Cazenove in April 2010 and has been replaced by John Warren. This fund is modelled on the Cayman Islands based hedge fund that Paul Marriage has been successfully co-managing since 2005. The fund is managed aggressively. The largest threat to this strategy would be a prolonged period of significant small cap underperformance. Investors should be aware that Absolute Return funds do not guarantee a positive return and you could get back less than you invested, as with any other investment. Additionally, the underlying assets of these funds generally use complex hedging techniques through the use of derivative products, which can carry additional risks which may not be immediately apparent.

Manager research

Average monthly relative returns

  • 16/17 0.08%
  • 17/18 0.00%
  • 18/19 0.00%
  • 19/20 0.29%
  • 20/21 0.06%

Bestinvest MRI

  • 3 years 0.00%
  • 5 years 0.00%
  • Career 0.35%
  • 3 years 0.00%
  • 5 years 0.00%
  • Career 99.60%

Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

Paul Marriage

Marriage launched Tellworth Investments in October 2017. He previously worked for Cazenove Capital from 2005, then became Head of UK Dynamic at Schroders in 2013 after the acquisition of Cazenove. Prior to this he worked for Insight from 1998, initially as an Analyst researching UK smaller companies and from 2003 as manager of its 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 16.1 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.35%. 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 more than 99%.

Periods of worst performance

Absolute -55.00% (May 2007 - February 2009)
Relative -16.00% (June 2008 - March 2009)

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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Top 10 holdings

Data accurate as at 30 June 2020

3.4% Codemasters Group Holdings Plc
3.1% Calisen Plc
2.9% Secure Income Reit
2.8% Ig Design
2.7% Caretech Hldgs Plc
2.7% Chemring Group
2.3% Gb Group
2.3% Discoverie Group Plc
2.3% Watches Of Switzerland Group Plc
2.2% Midwich Group Plc
Source: Trustnet

Sector breakdown

Industrials 15.00%
Financials 12.00%
Technology 8.00%
Consumer Discretionary 7.00%
Consumer Staples 6.00%
Real Estate 4.00%
Health Care 4.00%
Telecommunications 1.00%

Portfolio

Typically 40-60 holdings on each side of the balance sheet, generally focused on small and mid-cap stocks. Typically the fund will have net exposure of 75%. The fund will use CFDs, Equities and FTSE futures. Shorts are done through CFDs. Stock positions will be no more than 7.5% of NAV.

Constraints

Maximum 300% gross market exposure.

Key Investor Information

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