Omnis UK Equity Fund
Schroder Investment Management Limited.
David Docherty and Andy Brough.
Key fund facts
- Heritage – Schroders has a strong and established track record in the active management of both large and small cap UK Equities. Consequently, the team’s fund managers and analysts enjoy excellent access to company managements. Past performance is not a guide to future performance and may not be repeated.
- Thinking like investors not collectors – Schroders are stock pickers, not index trackers, seeking to find the most attractive investment opportunities before they have been identified by the market.
- Unique – the fund is bespoke to Omnis, constructed from a blend of the expertise of Schroders' large and small cap UK Equity teams. Schroders do not currently manage an equivalent retail fund.
The aim is to achieve capital growth.
The Fund intends to invest primarily in companies incorporated in, or significantly exposed to, the United Kingdom. The Fund may also invest in other transferable securities (for example, international equities), units in collective investment schemes, money market instruments, warrants and deposits as detailed in the Prospectus. No more than 10% of the Scheme Property of the Fund will be invested in other collective investment schemes.
Investment process overview
Fundamental research is at the heart of the fund’s investment process and enables the investment team to identify mispriced investment opportunities. Schroders’ Fund Managers (“investors”) look beyond short-term news flow and focus on each company’s individual ability to create value for shareholders over the long-term. They are patient investors with the confidence to be contrarian when necessary believing that, over time, the mispricing of stocks versus fair value will be recognised by the market.
Schroders has a well-resourced team of disciplined Fund Managers and Analysts providing an exceptional breadth of experience and diversified views to generate ideas, research and construct its portfolios. As one of the largest institutional investors in the UK, Schroders has substantial access to the management teams of the companies in which it invests. Fund Managers and Analysts meet companies to understand and evaluate their strategies, identify the factors that drive profits and understand the risks involved.
The fund is concentrated in larger companies with an allocation to smaller companies selected by Schroders’ leading UK small and midcap Fund Manager.
The larger capitalisation companies within the Fund are selected in a four stage process of idea generation, research, portfolio construction and ongoing review:
- Idea generation results from company meetings, research or from performance, growth and valuation discrepancies observed in quantitative screens;
- Proprietary research focuses on an analysis of company accounts, its franchise and competitive advantage and a subjective evaluation of company management and prospects;
- Fund holdings and their size are selected on the basis of investment conviction aiming to balance low volatility and sufficient active positioning;
- Holdings are continually reviewed to ensure they merit inclusion in the Fund and are sold if they reach a price level where there appear to be better opportunities elsewhere.
Smaller companies are selected using Schroders simple framework that they term the ‘Investment Triangle’. Within this framework, companies are classified into three distinct groups:
- ‘A’ companies operate in industries where demand for their goods or services exceeds supply, which gives them pricing power;
- ‘B’ companies are usually cyclical stocks or franchises in transition where a catalyst for reappraisal by the market is identifiable;
- ‘C’ companies operate in industries where supply exceeds demand and which are typically experiencing long-term decline.
Schroders focus on longer-term opportunities among ‘A’ companies, trade ‘B’ companies and avoid ‘C’ companies. The Fund Managers seek to anticipate the movement of companies and industries around this investment triangle.
Bottom up stock selection has the primary influence on the Fund. Individual stock weightings reflect a combination of investment conviction and the team’s assessment of the stock’s likely volatility. Sector weightings are primarily shaped by individual stock selection decisions, with care being taken to ensure that this does not result in an excessive or unintended thematic concentration. By avoiding an inherent style bias, the fund seeks to outperform throughout the peaks and troughs of the market cycle.