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Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
Matt hudson uk-equity-income_citywire presentation_uk05785
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Matt hudson uk-equity-income_citywire presentation_uk05785

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  • 1. Cazenove UK Equity Income Fund Matthew Hudson Fund Manager October 2013 | For professional advisers only. This material is not suitable for retail clients
  • 2. Cazenove UK Equity Income Fund Summary Business cycle philosophy  Pragmatic income approach   Fund size: £480 million  Slowdown Recession Recovery Expansion Low/no yield, high capital growth Dividend growth 1st quartile over 1, 3 and 5 years Fund yield: 3.6% Cycle: Stock: Delivers: Market yield and dividend growth High yield Pragmatic process: income and capital Premium Real Yields Capital Returns Superior Dividend Growth Source: FE Analytics, Schroders, bid to bid with net income reinvested, in GBP, B income class, as at 31 August 2013. For illustrative purposes only 1
  • 3. Cazenove UK Equity Income Fund Performance summary Five year cumulative Discrete annualised calendar 2013 2012 2011 2010 2009 Cazenove UK Equity Income Fund (%) 24.0 20.4 1.0 17.3 20.8 IMA UK Equity Income sector (%) 19.8 13.6 -3.2 14.6 23.7 Quartile ranking 1 1 1 1 3 0.8 0.6 0.4 0.2 0 -0.2  Top decile over 3 and 5 years -0.4  Only fund in the sector to be 1st quartile in 2010, 2011 and 2012 Cazenove UK Equity Income Fund IMA UK Equity Income FTSE All Share index Source: FE Analytics, bid to bid with net income reinvested, in GBP, B income class, as at 31 August 2013 2
  • 4. ? The power of compounding? Income reinvested outperforms* 1,600 5 years cumulative income returns 1,400 Cazenove UK Equity Income Fund 1,000 25.5% FTSE All-Share index 1,200 20.0% 800 600 400 200 01-Dec-11 01-Dec-09 01-Dec-07 01-Dec-05 01-Dec-03 01-Dec-01 01-Dec-99 01-Dec-97 01-Dec-95 01-Dec-93 01-Dec-91 01-Dec-89 01-Dec-87 01-Dec-85 0 FTSE All Share Price Index FTSE All Share Total Return Index Source:, bid to bid with net income reinvested, in GBP, B income share class. (LHS) FE Analytics, since benchmark launch; (RHS) Morningstar, B income share class, five years to 31 August 2013 3
  • 5. Appreciating capital Capital returns are the driver of total returns Annualised returns 9.00 7.80 8.00 7.00 5.96 6.00 5.00 4.49 4.00 3.16 3.00 2.29 2.00 1.73 1.00 0.00 IMA UK Equity Income FTSE All-Share Total Return % (Annualised) Cazenove UK Equity Income B Inc Capital Return % (Annualised) Source: Lipper, B (Inc) share class, net income reinvested 31 December 2005 to 28 February 2013 4
  • 6. Cazenove UK Equity Income Fund Performance analysis Cazenove UK Equity Income Fund relative to IMA UK Equity Income (%) Relative Performance 3.00 Cumulative fund performance 90 70 2.00 50 1.00 30 10 0.00 -10 -1.00 -30 -50 -2.00 -70 “Bull” Cumulative Fund Performance Oct-12 Jun-12 Feb-12 Oct-11 Jun-11 Feb-11 Oct-10 Jun-10 Feb-10 Oct-09 Jun-09 Feb-09 Oct-08 Jun-08 Feb-08 Oct-07 Jun-07 Feb-07 Oct-06 Jun-06 Feb-06 Oct-05 -90 Jun-05 -3.00 “Bear” Source: Lipper 30 June 2005 to 31 December 2012 5
  • 7. Cazenove UK Equity Income Fund Risk analysis and returns against the UK Equity Income sector Total return (% p.a.) Volatility (% p.a.) 14 Sharpe ratio 1.0 12 15 10 13 0.8 0.6 8 11 4 0.4 9 6 0.2 Total relative return (% p.a.) Tracking error (% p.a.) 8.0 Information ratio 1.4 7.00 5.0 2.0 0.9 0.4 5.00 -1.0 -0.1 -4.0 3.00 -0.6 Beta Jensen's alpha (% p.a.) 25th – 50th percentile 50th – 75th percentile 1.10 6.0 1.00 10th – 25th percentile 4.0 0.90 0.80 2.0 0.70 90th – 75th percentile 0.0 0.60 -2.0 Source: Cazenove Capital. Analysis shown for three years to 31 December 2012 6
  • 8. Investment philosophy and process
  • 9. Business cycle investing overview Back to reality Business cycle in theory Business cycle in reality  Global industrial production – % change year on year Recession Recovery Expansion Slowdown Expansion Slowdown Source: Morgan Stanley, MSCI, Datastream, as at 31 December 2012 8
  • 10. Income strategy Through the cycle Cycle: Slowdown Recession Recovery Expansion Low/no yield, high capital growth Dividend growth Stock: Delivers: Market yield and dividend growth High yield Source: Cazenove Capital Management. The securities shown are for illustrative purposes only and not a recommendation to buy or sell shares 9
  • 11. Income portfolio construction Driving returns  Pragmatic income investor  Premium yield and dividend growth  Focused portfolio  Benchmark aware Premium Real Yields Capital Returns Superior Dividend Growth Source: Cazenove Capital, as at 30 June 2013 10
  • 12. Cazenove UK Equity Income Fund Portfolio through the cycle Business cycle (+ve) active weights Business cycle (-ve) active weights Commodity Cyclical Financial Growth Defensive Value Defensive Commodity Cyclical Financial Growth Defensive Value Defensive Consumer Cyclical Growth Industrial Cyclical Jul-12 Jan-12 Jul-11 Jan-11 Jul-10 Jan-10 Jul-09 Jan-09 Jul-08 Jan-08 Jul-12 -40 Jan-12 0 Jul-11 -30 Jan-11 10 Jul-10 -20 Jan-10 20 Jul-09 -10 Jan-09 30 Jul-08 0 Jan-08 40 Consumer Cyclical Growth Industrial Cyclical December 2005 December 2006 December 2007 December 2008* December 2009 December 2010 December 2011 December 2012 Premium real yields 44 49 68 86 60 54 55 60 Superior dividend growth 37 30 21 6 10 20 30 24 Capital returns 19 21 11 8 30 26 15 16 No of stocks 69 78 58 51 68 57 52 55 Source: Cazenove Capital Management, as at 31 May 2013. *Cash 4.7% at year end 2008 11
  • 13. Income portfolio construction Stock selection FTSE 350: Income characteristics  Income screening – yield, growth + quality  Company meetings and fundamental analysis  Detailed stock history (consistency, cover, quality etc.)  Monthly fund dividend forecasts Yield 5.4% DPS Growth 6.5% P/E 10.2 Yield 2.9% DPS Growth 12.0% P/E 13.6 Yield 2.3% DPS Growth 13% P/E 13.5 Superior Dividend Growth Capital Returns Premium Real Yields Source: Cazenove Capital, Factset (FTSE 350 and ex IT) 12
  • 14. Outlook and current positioning
  • 15. Market review Global cycles? UK Markit Manufacturing PMI US ISM Manufacturing PMI Germany Markit Manufacturing PMI Japan Markit Manufacturing PMI Source: Markit and Thomson Datastream, to 31 August 2013 14
  • 16. Market review Mapping the landscape GARP becomes GAAP Growth at any price (GAAP) Growth re-rated in a low growth world Smaller is bigger Mid and small caps out performance a global phenomenon Greenbucks USD weakness reversing as US economy recovers ‘Risk On Risk Off’ European sovereign spreads mattered in 2010 , 2011, 2012….but 2013? US economic strength U H S OU SIN STARTS & RESID G EN TIAL FIXED IN VESTM EN % G P(G T D 00I) 2500 6.50 6.00 2000 5.50 5.00 1500 4.50 4.00 1000 3.50 3.00 2.50 500 400 2.00 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 US NEW PRIVATE HOUSING UNITS STARTED (AR) VOLA Resdntial GDFCF as % GDP(R.H.SCALE) Source: ASR/Morgan Stanley 09 11 13 Source: DATASTREAM 15
  • 17. Income investing Yield at a premium Trend P/E relative, 1990–2013  Investors mistaking ‘low volatility’ for growth 180  ‘Secure’ dividend stocks squeezed upwards 160  Value traps? 140 120 100 80 60 40 Jan-90 May-91 Sep-92 Jan-94 May-95 Sep-96 Jan-98 May-99 Sep-00 Jan-02 May-03 Sep-04 Jan-06 May-07 Sep-08 Jan-10 May-11 Sep-12 20 Trend P/E relative Average + 1 SD - 1 SD Trend historic EPS growth rate = 0.0% Source: Mirabaud, as at 31 May 2013. The securities shown are for illustrative purposes only and not a recommendation to buy or sell shares 16
  • 18. Income investing Valu’ in yield Trend P/E relative, 1990–2012  ‘High volatility’ stock de-rated is the opposite side of the trade 140 120  Value opportunity 100 80 60 40 20 Jan-90 Jun-91 Nov-92 Apr-94 Sep-95 Feb-97 Jul-98 Dec-99 May-01 Oct-02 Mar-04 Aug-05 Jan-07 Jun-08 Nov-09 Apr-11 Sep-12 0 Trend P/E relative Average + 1 SD - 1 SD Trend historic EPS growth rate = 3.9% Source: Mirabaud, as at 31 May 2013. The securities shown are for illustrative purposes only and not a recommendation to buy or sell shares 17
  • 19. After the fall Opportunities in UK equity income Starting UK yields and 10 year returns    Market yield attractive after “yield rise” with dividend growth a positive At stock level, dividend yield needs to be combined with attractive valuation (FCF, P/E etc) Higher volatility stocks (e.g. cyclicals) are attractive investments at the right point in the cycle 10-year total return CAGR 30 25 20 15 R² = 0.7 10 5 0 3.6% now -5 2  Dividend growth at mid-cycle levels but special return enhancements 3 4 5 6 7 8 Dividend yield UK dividend revisions 15 10 5 0 -5 -10 -15 May-08 May-09 May-10 May-11 May-12 May-13 % of Estimates Upgraded Less % Downgraded Per Month 3m Rolling Average Source: Citigroup, as at 5 July 2013 18
  • 20. After the fall Dividend recoveries UK dividend growth forecasts  Dividend recovery underway  UK dividend growth 2012/13 circa 6–7%  Dividend growth stocks re-rating  Special dividend enhancements 20 16 12 8 Year Fund Dividend distributions (net) 2007 4.39p 2008 5.12p 2009 4.84p 2011 Dividend growth 2012 Dividend growth 2010 4.55p 2013 Dividend growth 2014 Dividend growth 2011 4.86p 2012 5.12p 4 Aug-10 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Source: (chart) Citi, as at 15 August 2013 (table) MSDW/Datastream, FTSE, Global Financial Data, Morgan Stanley Research, Shore Capital, as at 31 December 2012 The securities shown are for illustrative purposes only and not a recommendation to buy or sell shares 19
  • 21. Portfolio strategy Active positions Underweight Market -3.85% Royal Dutch Shell A -3.63% HSBC -2.73% Royal Dutch Shell -2.53% Diageo -2.00% BG Group -1.98% BHP Billiton -1.74% Vodafone -1.55% Lloyds -1.50% Unilever -1.49% SAB Miller Overweight Reed Elsevier +1.87% BT Group +1.71% Jupiter Fund Management +1.69% DS Smith +1.60% Aviva +1.57% Debenhams +1.57% Legal and General +1.55% Resolution +1.54% Beazley +1.52% Kier +1.51% Market cap exposures (%) Portfolio risk Predicted tracking error p.a. Beta # of stocks 3.1% 0.95 58 Index Portfolio FTSE 100 FTSE 250 FTSE Small Cap AIM Ex Index Cash 83.1% 14.3% 2.5% - 62.6% 27.2% 3.0% 3.4% 4.2% Source: Schroders, as at 18 September 2013. The securities shown are for illustrative purposes and not a recommendation to buy or sell shares 20
  • 22. Portfolio strategy Business cycle style tilts Change over 12 months vs. FTSE All-share Fund % Index % Commodity cyclicals -20.5% 11.9 21.5 Rio Tinto Consumer cyclicals +35.0% 13.6 6.4 Carphone Warehouse Industrial cyclicals +10.8% 9.1 5.8 Melrose Financials +9.7% 22.1 19.9 Intermediate Capital = 7.3 4.5 Cineworld Growth +16.0% 1.0 4.7 Sage Growth defensives +5.3% 7.3 9.8 Babcock Value defensives +0.9% 27.6 27.4 Reed Underweight Neutral or N/A Style grouping Small/Unallocated/Cash Overweight Key stocks Source: Schroders, as at 18 September 2013. The securities shown are for illustrative purposes only and not a recommendation to buy or sell shares 21
  • 23. Outlook Earnings and leading indicators, 1988-2013     Developed markets: US growth “robust”, Europe weak but improving and Abenomics starting to work Emerging markets: China activity stabilising, FX pressures and weaker growth outside China UK earnings base stabilising – cyclicals should outperform defensives Portfolio positive skew towards consumer cyclicals and financials over growth defensives. Moderating underweight in commodity cyclicals 65 60 55 50 45 40 35 30 30 10 -10 -30 -50 88 90 92 94 96 98 00 02 04 06 08 10 12 US ISM Index - 6mth Lead (LHS) UK PMI (LHS) Global PMI (LHS) 12m Fwd Earn - YoY Growth % (RHS) UK trend earnings growth, 1971–2012 400 300 200 UK EPS Feb-11 Jan-08 Dec-04 Nov-01 Oct-98 Sep-95 Aug-92 Jul-89 Jun-86 May-83 Apr-80 Mar-77 Feb-74 0 Jan-71 100 Trend EPS 7% p.a., base April 1978 Source: Citi, Thomson Reuters Datastream, as at 5 July 2013 The securities shown are for illustrative purposes only and not a recommendation to buy or sell shares 22
  • 24. Appendices
  • 25. Matt Hudson Fund manager  Member of the Cazenove Capital Pan-European equity team at Schroders, with responsibility for equity income portfolios  Manages over £850m in UK equity income strategies – Cazenove UK Equity Income Fund – Equity Income Trust for Charities, a UK authorised Common Investment Fund  Responsible for the following UK sectors: – Banks, construction and materials, gas water and multi utilities, mining and electricity  Joined Cazenove Capital in 2001 from AIB Govett Investment Management. Prior to this he was a chartered accountant at PriceWaterhouseCoopers. Graduated from Cambridge University with a degree in History. Matthew has 14 years of investment experience Source: Citywire, as at 30 June 2013 24
  • 26. Cazenove Capital Pan-European equity team At Schroders Julie Dean, Head of Business Cycle Team UK Europe Steve Cordell UK Absolute Steve Cordell Europe ex UK Paul Marriage UK Smaller Companies Steve Cordell Pan Europe John Warren UK Smaller Companies Lionel Rayon Pan Europe, High Alpha Kuldip Shergill Pan Europe, High Alpha Matthew Hudson Equity Income Julie Dean UK Equity David Docherty UK Equity Michael Zorko UK Equity Wade Pollard UK Equity Charlotte Morrish James Sym Europe ex UK UK Equity Source: Schroders, as at 6 July 2013 25
  • 27. Cazenove UK Equity Income Fund Overview    Pragmatic income Benchmark FTSE All-Share index Number of stocks  Current 58, minimum 35 Income and capital returns Stock +5%/No minimum Business cycle approach Focused portfolio Sector +10/No minimum Portfolio restrictions (relative to FTAS) 50% max weight in mid-cap,10% in small/AIM/other (+ minimum 80% in UK Equities) Tracking risk 3.1% Launch date 6 May 2005 Fund size £507m Structure UK Domiciled, UCITS III Base currency £ (Sterling) Historic yield 3.6% The fund aims to outperform by 1.5% over rolling 3 year periods and achieve a minimum yield of 110% of the benchmark yield* Source: Schroders, as at 31 August 2013. Ratings from Citywire, Rayner Spencer Mills, Morningstar and Trustnet Crowns, as at 30 September 2013 *Internal performance objective 26
  • 28. Cazenove UK Equity Income Fund Dividends and income returns Year Dividend distributions (net) Fund income return 5 years cumulative FTSE All Share return 5 years cumulative 2007 4.39p 25.6% 20.3% 2008 5.12p Share Class 4.55p 2011 4.86p 2012 5.12p A Inc CAZUEAI LN 65000477 B Inc CAZUEBI LN 65000481 X Inc CAZUKEX LN 65000480 CAZUKXA LN 68150522 4.84p 2010 Lipper Codes X Acc 2009 Bloomberg Ticker Source: Cazenove Capital Management. Five years ended 31 December 2011 (B Income class). Note: 2013 interim dividend growth +15% year on year 27
  • 29. Cazenove Capital UK equities Research responsibilities Steve Cordell Julie Dean David Docherty  Technology Hardware  General Financial  Aerospace and Defence  Software  Healthcare Equipment  Automobile and Parts  Life Insurance  Electronic and Electrical Equipment  Non-Life Insurance  Forestry and Paper  Pharmaceuticals and Biotechnology  General Industrials  Industrial Engineering  Oil and Gas Producers  Oil Equipment and Services Paul Marriage  Smaller Companies John Warren  Support Services – ex FTSE 100  Travel and Leisure Matthew Hudson Banks  Construction and Materials  Electricity  Michael Zorko  Gas Water and Multi Utilities  Mining and Industrial Metals Charlotte Morrish  Telecoms Chemicals Wade Pollard Beverages  Food and Drug Retailers  Food Producers    General Retailers  Household Goods – Personal  Household Goods – Housebuilders  Media  Industrial Transportation  Personal Goods  Real Estate  Travel and Leisure  Support Services – FTSE 100  Tobacco Source: Schroders, as at 31 August 2013 28
  • 30. Business cycles in action Conflicting emotions Earnings downgraded, political interventions… …but valuations supportive UK market price earnings multiples based on trend earnings growth UK: Trend P/E, 1971–2012 30 26 22 18 14 10 Trend PE Median + 1 SD Jan-11 Sep-07 May-04 Jan-01 Sep-97 May-94 Jan-91 Sep-87 May-84 Jan-81 Sep-77 May-74 2 Jan-71 6 -1 SD Source: Mirabaud, as at 11 April 2013 29
  • 31. Business cycles in action ‘Added cyclicals’ in Q3 2011 US optimistic…  US economic surprise indicator …but market focused on European woes  UK defensives percentages PER premium vs. cyclicals Source: Cazenove Capital, Datastream, BAML, as at end of 2012 30
  • 32. Business cycles in action ‘Flip flop’ in Q4 2011 Style group performance pre- and post-LTRO announcement Absolute Returns 50 40 30 Industrial cyclicals Commodity cyclicals Consumer cyclicals Financials Growth 20 Growth Defensives Value Defensives 10 0 -10 -20 -30 ‘Downtime’ – style groupings performance (31 December 2010 to 4 October 2011) ‘LTRO Bounce’ – style groupings performance (4 October 2011 – to 20 March 2012) Source: Cazenove Capital Management, as at 31 May 2013 31
  • 33. Business cycle investing Market analysis  Sector market divides are not homogenous. They do not necessarily help us determine the behaviour ~ of these stocks within the cycle  Define the beta of stocks and allocate them to seven style groupings: Commodity cyclicals Consumer cyclicals Industrial cyclicals HIGH BETA Growth Financials Growth defensives Value defensives LOW BETA  Pragmatic approach combining top-down macro view with earnings based security selection  Avoid permanent style/size bias  Demand for products and services changes throughout the business cycle  Operational gearing of companies impacts profitability of companies Source: Cazenove Capital Management 32
  • 34. Seven style groupings  Commodity cyclicals Stocks whose revenues are linked either directly or indirectly to a particular commodity product such as oil, steel, gas, mining, bulk chemicals e.g. BP, Rio Tinto  Consumer cyclicals Cyclical stocks which rely on consumer spending for their revenues e.g. retailers, automotives, house builders, leisure, general retail e.g. Marks & Spencer, easyJet  Industrial cyclicals Stocks which manufacture capital goods or which have revenues linked to industrial production e.g. engineering, aerospace, construction e.g. GKN, Cookson  Growth Stocks which grow revenues well in excess of GDP with a high degree of uncertainty or volatility e.g. luxury goods, medical technology, IT e.g. Smith and Nephew, ARM Holdings  Financials/Interest rate sensitive Stocks whose business depends on interest rate spreads, financial markets and asset valuations e.g. banks, insurers, real estate e.g. Barclays, Land Securities  Growth defensives Stocks which grow revenues in excess of GDP with a low volatility and high visibility e.g. support services, food retailers e.g. Pearson, Compass Group  Value defensives Stocks which grow revenues at or below GDP with low volatility and high visibility e.g. telecommunications, pharmaceuticals, utilities, food producers, beverages, tobacco, e.g. GlaxoSmithKline, Vodafone Source: Cazenove Capital. The securities and sectors shown are for illustrative purposes and not a recommendation to buy or sell shares 33
  • 35. Business cycle investing Horses for courses Performance relative to FTSE All Share 31 Nov 1999 – 12 March 2003 12 March 2003 – 15 June 2007 15 June 2007 – 3 March 2009 3-Mar-2009 – 31-Aug-2013 Electronic and electrical Cyclical -74% +272% -42% +82% Bodycote Industrial engineering Cyclical -55% +114% -26% +184% Senior Aerospace and defense Cyclical -40% +100% -48% +482% Diageo Beverages Defensive +147% -17% +40% +32% GlaxoSmithKline Pharmaceuticals Defensive +16% -39% +49% -15% Reed Elsevier Media Defensive +72% -23% +43% -16% Stock Sector Morgan Adv. Mats. Style Source: Thomson Datastream, as at 31 August 2013. The securities shown are for illustrative purposes and not a recommendation to buy or sell shares 34
  • 36. Stock selection Filtrona  Franchise Filtrona From 31 May 2005 to 9 February 20012 Weekly FILT RONA  Income  Optionality FROM 31/5/05 T O 9/2/12 WEEKLY 450 400 Recovery to growth 350 Sold 300 250 A growth stock Bought 200 A value trap 150 100 2005 2006 2007 2008 2009 HIGH 397.30 10/ 1/12 LOW 110.25 23/ 6/09 LAST 380.30 2010 2011 2012 Source: Thomson Reuters Datastream Source: Thomson Datastream, 20 January 2005 to 9 February 2012 weekly. The securities shown are for illustrative purposes only and not a recommendation to buy or sell shares 35
  • 37. Important information For professional advisers only. This material is not suitable for retail clients. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested. Schroders has expressed its own views and these may change. The data contained in this document has been sourced by Schroders and should be independently verified before further publication or use. The forecasts included in this presentation should not be relied upon, are not guaranteed and are provided only as at the date of issue. Our forecasts are based on our own assumptions which may change. We accept no responsibility for any errors of fact or opinion and assume no obligation to provide you with any changes to our assumptions or forecasts. Forecasts and assumptions may be affected by external economic or other factors. The fund primarily invests in equities and as such tends to be more volatile than a fund investing in bonds, but may also offer greater potential for growth. The value of the underlying investments in equity funds may fluctuate quite dramatically in response to the activities and results of individual companies, as well as in connection with general market and economic conditions. The levels and bases of tax assumptions may change. Please refer to the Prospectus and Key Investor Information document for further details. Telephone calls may be recorded for training and monitoring purposes. Forecast risk warning: The forecasts included in this presentation should not be relied upon, are not guaranteed and are provided only as at the date of issue. Our forecasts are based on our own assumptions which may change. We accept no responsibility for any errors of fact or opinion and assume no obligation to provide you with any changes to our assumptions or forecasts. Forecasts and assumptions may be affected by external economic or other factors. FTSE International Limited (“FTSE”). “FTSE” is a trade mark of the London Stock Exchange Group of companies and is used by FTSE International Limited under licence. All rights in the FTSE indices vest in FTSE and/or its licensors. Neither FTSE not its licensors accept any liability for any errors or omissions in the FTSE indices or underlying data. No further distribution of FTSE data is permitted without FTSE’s express written consent. Source for ratings: Citywire, Rayner Spencer Mills, Morningstar and Trustnet Crowns, as at 30 September 2013. Issued in September 2013 by Schroder Investments Limited, 31 Gresham Street, London, EC2V 7QA. Registered no. 2015527 England. Authorised and regulated by the Financial Conduct Authority. UK05785 36

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