Schroder Global Quality Fund
Global Quality is an actively managed and index-unaware strategy that aims to generate long term returns before fees in excess of traditional capitalisation weighted global equity indices but with lower downside risks than the wider market. Analysing a universe of 5,000 stocks, we use a bottom-up process to construct a highly diversified portfolio which typically holds over 400 stocks.
Global Quality aims to offer investors a more stable form of growth investing and a far more consistent return profile than traditional growth managers. We focus on identifying companies that are profitable, offer stable growth and are financially strong while avoiding ‘glamour’ or thematic stocks which we believe carry a higher risk of disappointment.
To generate long-term returns before fees in excess of traditional capitalisation weighted global equity indices.
The benefits of investing in the Fund include:
- Potential for higher long-term returns with lower risk relative to the market. Our research has found that Quality companies (as defined by measures of profitability, stability and financial strength) tend to outperform in the long-run. While the Fund is designed to outperform across a broad range of market environments, it tends to perform particularly well at times of heightened risk aversion or market uncertainty. As such, the Fund offers investors the potential for a more stable form of growth investing and aims to deliver higher returns through time but with below-market risk.
- Exceptional global diversification and high active share as we maximise the potential opportunity set by analysing a global universe of over 5,000 stocks across both developed and emerging markets in order to construct a highly diversified portfolio, typically invested in more than 400 stocks. This high level of diversification minimises stock-specific risk without sacrificing conviction.
- Dedicated and well resourced QEP investment team with clear ownership and accountability for meeting the investment objective of the Fund.
- Market risk: includes the risk of volatility and negative returns arising from investment markets.
- Equities risk: includes the risk that changes in share prices will negatively impact on the value of investment.
- International investments risk: includes the risk that international political, economic or currency events negatively impact the value of investments.
- Emerging Markets/Frontier Markets risk: includes the risk of significantly higher price volatility, less liquidity and more government intervention in the economy than in developed markets.
For a comprehensive list of risks please refer to the PDS.
|Fund Inception date||2 June 2009|
Wholesale class - $20,000
|Management costs (ICR)||
Wholesale class - 0.98% p.a.
|Distributions||Normally last business day of June and December|
^Subject to change. Refer to the Buy/Sell spreads page in the Fund Centre
How the Fund is managed
Our investment process can be summarised in three stages:
Stage 1. Global Quality Rank
We begin by ranking a global universe of over 5,000 companies in more than 40 countries (both developed and emerging) in terms of their Quality. This involves assessing companies on a range of measures to capture profitability, stability and financial strength. We have also developed specific metrics to analyse the quality of the balance sheets of financials companies, based on measures of liquidity, leverage and the ability of a business to service its debt. Our investment universe is the top third of the Global Quality Rank.
Stage 2. Stock Selection
In deciding how much of each stock to own, we focus on company fundamentals as opposed to market capitalisation. Specifically, a focus on stock valuations helps us to avoid ‘over-paying’ for Quality where we do not think the price is justified. As such high quality, cheaper stocks will typically hold a higher weight in the portfolio. Other considerations in scaling position sizes include measures of risk, liquidity and volatility. In order to ensure proper diversification, we apply a maximum position size limit to individual stocks and construct a highly diversified portfolio.
Stage 3. Portfolio Construction
Portfolio construction is bottom-up, driven by stock selection. Portfolio managers assess the portfolio every day and re-balance according to the opportunities available. Our portfolio managers are responsible for controlling the overall risk budget of our funds, ensuring an efficient trade-off between potential risks and rewards. Exceptional diversification is one of our most important tools, maximising exposure to return opportunities across sectors, countries and market capitalisation while minimising stock-specfic risk. Portfolio managers ensure that the portfolio is sufficiently diversified, typically invested across in excess of 400 stocks. Portfolio managers implement every trade decision and as experienced investors, provide an important overlay in terms of awareness of future opportunities and risks in global markets.