Schroders expands stable of global equity funds

Schroders launched a new global equity fund this week, aiming to exploit 'growth gaps.'

The Schroder Global Equity Alpha Fund was introduced to wholesale and institutional investors this week, a concentrated portfolio of global equities managed by co-head of equities Alex Tedder and portfolio manager, multi-regional equities Frank Thormann.

The new fund looks to outperform the MSCI All Country World Index over three to five years.

"While pursuing a style agnostic approach, the fund tilts to underweight value and overweight quality and growth, distinctively targeting companies that have strong growth prospects yet to be recognised by the market," Schroders said.

The underlying strategy has been operating for 18 years with an investment philosophy based on the belief that "the market often misprices future earnings potential and that companies generating earnings in excess of the market's expectations will therefore outperform."

Schroders said 'growth gaps' can materialise in stocks where there's a difference between underlying company fundamentals and market estimates. This creates three inefficiencies, being markets overreacting to short-terms news flow; an overreliance on historic growth and failure to identify catalysts for a change in growth trajectory; and markets failing to look far enough ahead when assessing earnings power.

The management fees and costs are estimated to be 0.65% with transaction costs of 0.06% per annum.

Schroders said the new fund represents global equities for a new era of investing.

"Global forces are driving a fundamental shift of major proportions for markets and societies. These include decarbonisation, demographics and deglobalisation. Cost pressures from these forces and high sovereign debt look set to keep interest rates higher for some time," it said.

"A recalibration of investment quality, risk and asset mix seems likely. In this new era, company valuations will be at the core, an essential ingredient to achieving successful long-term performance. This sets the scene for a valuation reset and a return to fundamentals-led, active equity investing principles.

"Achieving success in this era seems more likely with a nimble global equity fund that can adapt to a changeable interest rate environment. A fund focused not just on growth but growth at the right price is well positioned to reap this new era's opportunities."

This is the latest local fund launch for Schroders, which most recently launched the Schroder Australian High Yielding Credit Fund in June.