Fund of the month
The Fund of the Month based on our customers' investment choices in July 2008 was the Global Emerging Markets Fund from Schroders.
We've asked Schroders a few questions to learn more about the fund.
July 2008 Snapshot: Schroders Global Emerging Markets Fund
Emerging markets were volatile during the second quarter of 2008. Having rallied earlier in the period they sold off heavily in June. The Schroder Global Emerging Markets Fund performed ahead of the benchmark returning -3.8% net of fees for the 3 months to June 08 compared with the MSCI Emerging Markets Index which returned -5.7% for the same period.
Country allocation was positive with the underweight to India and overweight positions in Brazil and Russia adding the most value. India was particularly weak over the quarter having also performed poorly in the first quarter of 2008. Brazil and Russia both benefited from the ongoing strength of commodity prices. In addition the underweight to Taiwan and off index position in the UAE was positive. Taiwan's exports are holding up better than expected but the risks of slower economic growth are mounting. This was somewhat offset by the overweight positions in Korea and Thailand. The domestic economy in Korea remains sluggish and the currency has been very weak. In Thailand, the political backdrop deteriorated over the quarter. Stock selection was positive in China (overweight to CNOOC and Hidili Inds) and Korea (overweight LG Chemical, KT&G Corp and zero weight Hyundai Heavy). This was offset by our choice of stocks in Argentina (zero weight Tenaris, overweight Telecom Argentina).
What is the investment objective of the fund?
To outperform the MSCI Emerging Markets Index net of withholding tax over 3 year rolling periods.
What is the investment strategy of the fund?
We believe that selecting the right countries to invest in within the emerging markets universe is a key source of return. We also believe that emerging markets are not fully efficient. Our investment team aims to exploit these inefficiencies through the considered application of extensive, rigorous fundamental research aimed at identifying mispriced opportunities.
Schroders has a balanced approach to investing in emerging market equities. We use a mix of top down analysis and bottom up stock selection and look to derive 50% of our added value from country allocation and 50% from stock selection. Our investment process is designed and managed to be 'core', with no style or size bias over a cycle.
Our investment process begins with the gathering and analysis of information on both countries and stocks, which is then used to decide allocations for the portfolio. Country allocation is driven by a quantitative model, to which the team applies judgmental overlay in a controlled manner. Fundamental research from our team of 21 locally-based analysts forms the basis of the stock selection process and portfolios are constructed by our three global emerging market fund managers focusing on their highest conviction ideas.
What is the asset allocation by sector?
As at 30 June 2008
Awards won by this fund
Winner - 2007 Standard & Poor's Fund Awards - International Equities - Emerging Markets.
Investment in the Schroder Global Emerging Markets Fund may be made on an application form in the current Product Disclosure Statement (PDS) which is available from Schroders' (ABN 22 000 443 274, AFS Licence 226473) website www.schroders.com.au. The information contained in this flyer is general information only. It does not contain and should not be taken as containing any financial product advice or financial product recommendations. Before acting on the information contained in this flyer you should obtain a copy of the PDS and consider the appropriateness of the information in regard to your objective, financial situation and needs before making any decision about whether to invest, or continue to hold. The repayment of capital and performance in the Fund is not guaranteed by Schroders or any company in the Schroders Group. Opinions constitute our judgement at the time of issue and are subject to change. Past performance is not an indicator of future performance. Investment guidelines represented are internal only and are subject to change without notice. For security reasons, telephone calls may be taped.