Schroder ISF Glbl Rcvy IZ Acc USD |
Morningstar's Take
|23/10/2023by Daniel Nilsson
| The disciplined process of the Schroder Global Recovery Fund continues to be consistently executed, leading to the People and Process ratings being maintained at Average and Above Average, respectively. The managers sit in the Global Value Team, and this mandate is spearheaded by the trio of Nick Kirrage, Simon Adler, and Liam Nunn. The managers have worked well together as part of the wider, well-regarded Global Value Team. Kirrage is the most experienced and provides investment leadership; our view is positive on the more recently appointed portfolio managers, Nunn and Adler, though time is needed to assess them over a full cycle of decision-making. The team is introspective, and there have been dedicated efforts to enhance and refine the process, including the recent integration of a data scientist among the team. Nunn and Adler have done much of the U.S. stock research since joining the team. We note that the team has relatively limited experience managing global mandates, but that this is improving over time. Close communication with the wider team responsible for the group’s U.K., European, and emerging-markets mandates is beneficial. A key strength is their rigorously applied investment process, which seeks to identify companies trading at significant discounts to their fair values. Valuation screens reduce the universe to a manageable number of stocks, which the team subjects to more-detailed research to eliminate any value traps. Use of these screens helps ensure that this process is scalable and appropriate for the size of the team covering global stocks. The managers are not benchmark-constrained when constructing the relatively focused portfolio. With investments driven by the best value opportunities, deviations from the MSCI All Country World Index benchmark can be sizable; combined with the long-term outlook, this can result in a performance profile that may look erratic on a calendar-year basis. Since the strategy’s inception in November 2015, the track record shows solid outperformance of 1.2% and 0.7% per year over the category average and MSCI ACWI Value Index, respectively (to the end of September 2023). Adjusting attribution to account for style shows solid contributions from stock-picking, with stock selection in financials being a key standout since inception. Overall, the well-structured and robust investment process means that there is still much to like here for investors seeking a pure value approach. The strategy is better suited to those who have a higher tolerance for volatility. |
A true-to-label deep-value offering that follows a consistent process, which is well executed. To find out how Morningstar rates a fund click here.
| Morningstar Pillars | |
| People | Average |
| Parent | Above Average |
| Process | Above Average |
Morningstar Medalist RatingMorningstar assigns the Medalist Rating to funds that are qualitatively and quantitatively assessed through manager research and algorithmic processes. The assessment turns on three key “pillars” – People, Process, and Parent – that yield an estimate of how well a fund will perform before fees but after adjusting for risk.
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