We have added Schroder European Recovery to our Recommended list.

Fund Snapshot

A European equity fund managed according to a disciplined value approach.  The team looks for companies that have suffered a significant operational and/or share price setback but have the potential to recover over the long term.  Within its sector, the fund features in our ‘Value-Biased’ category.

Fund Description – Key Points

• The fund is managed by Andrew Evans and Andrew Lyddon, members of Schroder’s Global Value team.  Nick Kirrage and Kevin Murphy co-head the Global Value team and have managed assets in the value style together at Schroders since 2006.
• The fund is managed according to a deep value style, with an emphasis on identifying stocks that have endured a significant setback in either profits or share price but have recovery potential.
• Given the contrarian style, the process is implemented with objectivity and a willingness to consider all stocks that appear cheap, regardless of past experience and industry preference.
• The fund is not constrained by the benchmark, but portfolio construction guidelines ensure that it is diversified across sectors and geographies.

Characteristics and utility

• The fund offers an unusually pure application of a long-term value and recovery investment approach.  The fund is likely to be meaningfully exposed to underperforming areas of the market that the managers believe have significant scope for a re-rating.
• Such positioning results in a highly differentiated performance outcome when compared to the index and most peers.  Recovery investing can endure long periods of underperforming when either the individual stocks remain out of favour or the style struggles.  The other side of the coin is that investors also enjoy periods of powerful positive performance as a re-rating occurs.
• Investors must therefore have a long investment horizon and tolerance for significant fluctuations in performance.
• With its distinctive, deep value investment style, the fund is a differentiated offering within the IA Europe ex UK sector, where such approaches are few and far between.

For more information about this and other funds in the IA Europe ex UK sector, please see our IA Sector Overview.