Schroders PLC · LSE:SDR
Schroders — Investor Presentation (March 2011)
32 slides from Schroders's investor presentation, Mar 9, 2011
Slide 1: Slide 1
Slide 2: Schroder ISF US Small & Mid Cap Equity and Schroder US Mid Cap Fund
Schroder ISF* US Small & Mid Cap Equity and Schroder US Mid Cap Fund 9 March 2011 Representing Schroders: Jenny Jones – Head of US Small and SMID Cap Equities Fred Schaefer – Product Manager *Schroder International Selection Fund is referred to as Schroder ISF throughout this presentation For profes
Slide 3: Allocations
Allocations “+ Schroders
Slide 4: Portfolio activity: sector positioning Q3 vs Q4 2010
Portfolio activity Sector positioning – Q3 2010 vs Q4 2010 Q3 2010 Q4 2010 Technology 4.1 Health Care 3.1 Health Care 4.0 Technology 2.6 Materials & Processing -0.2 Materials & Processing 0.8 Consumer Staples -0.7 Utilities -1.7 Utilities -2.3 Consumer Staples -2.0 Consumer Discretionary -2.9 Produc
Slide 5: Diversified alpha sources – Historical allocations
Schroder US Mid Cap Fund Diversified alpha sources – Historical allocations % 70 60 56% 50 40 38% 30 20 10 6% 0 Dec-05 Dec-06 Dec-07 Dec-08 Dec-10 Mar-06 Jun-06 Mar-07 Jun-07 Mar-08 Jun-08 Mar-09 Jun-09 Dec-09 Mar-10 Jun-10 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Mispriced Growth Steady Eddie Turnaround
Slide 6: Schroder US Mid Cap Fund
Schroder US Mid Cap Fund Sectors, Top 10 Stocks, Attribution and Performance – 31 December 2010
Slide 7: Sector weights – December 2010
Schroder US Mid Cap Fund Sector weights – 31 December 2010 Portfolio vs. Index % 30 25 21.6 20 15.6 15.7 15.8 14.1 14.0 15 13.3 10.6 11.0 8.9 10.0 10 8.1 6.8 7.0 5.0 5 3.0 3.6 1.0 0 Health Care Technology Materials & Utilities Consumer Producer Energy Consumer Financial Processing Staples Durables D
Slide 8: Portfolio activity: representative stock changes
Portfolio activity Representative stock changes Additions: Harman is the market leader in audio and infotainment products. The company has three main business segments: autos, consumer and professional, in which the products are catered to a global, diverse and high end customer market. Overall, we
Slide 9: Top ten holdings – December 2010
Schroder US Mid Cap Fund Top ten holdings – 31 December 2010 Company Description % of Fund A designer and manufacturer of packaging products for consumer Crown Holdings 2.5 goods Republic Services Provides waste collection and disposal services 2.0 SM Energy Engages in crude oil exploration and natu
Slide 10: Performance attribution – Q4 2010
Schroder US Mid Cap Fund Performance attribution – Q4 2010 Performance Attribution UK-RUT SMID vs. Russell 2500 9/30/2010 to 12/31/2010 British Pounds UK-RUT SMID Russell 2500 Attribution Analysis Average TotalContribution Average Total Contribution Allocation Selection + Total Russell Sectors Exten
Slide 11: Top and bottom performers – Q4 2010
Schroder US Mid Cap Fund Top and bottom performers – Q4 2010 Performance Attribution UK-RUT SMID vs. Russell 2500 9/30/2010 to 12/31/2010 British Pounds UK-RUT SMID Russell 2500 Attribution Analysis Average Total Contribution Average Total Contribution Allocation Selection Interaction Total Ticker H
Slide 12: Performance attribution – 2010
Schroder US Mid Cap Fund Performance attribution – 2010 Performance Attribution UK-RUT SMID vs. Russell 2500 12/31/2009 to 12/31/2010 British Pounds UK-RUT SMID Russell 2500 Attribution Analysis Average TotalContribution Average Total Contribution Allocation Selection + Total Russell Sectors Extende
Slide 13: Market environment
Market environment Our Steady Eddies were the main source of underperformance Contribution to Return Consolidated Smid - Ex [Cash], Ex [Unassigned] 12/31/2009 to 12/31/2010 U.S. Dollar Port. Average Total Contribution Type Weight Return To Return • A difficult year for Steady Eddies Mispriced Growth
Slide 14: Performance in varying market conditions
Performance in varying market conditions Good up market participation, strong down market protection Performance Pattern – We tend to outperform in flat to modestly rising markets and negative markets – We are less likely to outperform in strongly rising markets, given our emphasis on quality and ou
Slide 15: 2010 monthly performance
2010 monthly performance In a year of risk on/risk off we follow our pattern Schroders US Small and Mid Cap Russell 2500 Excess Return January -3.19 -3.35 0.15 • In 7 months index return > 3% February 3.57 4.97 -1.40 We lagged in all 7 March 4.59 7.64 -3.05 • In 4 months index returns<0% April 2.22
Slide 16: Performance
Schroder US Mid Cap Fund Performance Periods ending 31 December 2010 (%) Q4 2010 1 Yr 3 Yrs 5 Years US Mid Cap 13.5 21.8 35.5 53.2 Russell 2500 15.6 30.7 36.3 39.2 Outperformance (vs. Russell 2500) -2.1 -8.9 -0.8 14.0 Source: Schroders and Standard & Poor’s, bid to bid with net income reinvested. Pe
Slide 17: ISF US Small & Mid Cap Equity
Schroder ISF US Small & Mid Cap Equity Sectors, Top 10 Stocks, Attribution and Performance – 31 December 2010
Slide 18: Sector weights – December 2010
Schroder ISF US Small & Mid Cap Equity Sector weights – 31 December 2010 Portfolio vs. index % 30 25 21.6 20 15.9 15.7 15.6 13.7 14.0 15 13.3 10.6 10.8 10.3 10 8.9 8.1 6.8 7.0 5.2 5 3.0 3.6 1.0 0 Technology Health Care Financial Consumer Utilities Durables Energy Discretionary Producer Processing Ma
Slide 19: Top ten holdings – December 2010
Schroder ISF US Small & Mid Cap Equity Top ten holdings – 31 December 2010 Company Description % of Fund A designer and manufacturer of packaging products for consumer Crown Holdings 2.4 goods Republic Services Provides waste collection and disposal services 2.0 SM Energy Engages in crude oil explor
Slide 20: Performance attribution – Q4 2010
Schroder ISF US Small & Mid Cap Equity Performance attribution – Q4 2010 Performance Attribution LUX-Schroder ISF SMID vs. Russell 2500 9/30/2010 to 12/31/2010 U.S. Dollar LUX-SISF SMID Russell 2500 Attribution Analysis Average Total Contribution Average Total Contribution Allocation Selection + Tot
Slide 21: Top and bottom performers – Q4 2010
Schroder ISF US Small & Mid Cap Equity Top and bottom performers – Q4 2010 Performance Attribution LUX-Schroder ISF SMID vs. Russell 2500 9/30/2010 to 12/31/2010 U.S. Dollar LUX-SISF SMID Russell 2500 Attribution Analysis Average Total Contribution Average Total Contribution Allocation Selection Int
Slide 22: Performance attribution – 2010
Schroder ISF US Small & Mid Cap Equity Performance attribution – 2010 Performance Attribution LUX-Schroder ISF SMID vs. Russell 2500 12/31/2009 to 12/31/2010 U.S. Dollar LUX-SISF SMID Russell 2500 Attribution Analysis Average Total Contribution Average Total Contribution Allocation Selection + Total
Slide 23: Performance
Schroder ISF US Small & Mid Cap Equity Performance Periods ending 31 December 2010 (%) Q4 2010 1 yr 3 yrs 5 yrs Sichroder SF US Small & Mid Cap Equity 10.7 17.0 1.6 6.5 Russell 2500 15.5 25.9 2.5 4.9 Outperformance -4.8 -8.9 -0.9 +1.6 Source: Schroders. ‘C’ Class shares, net of fees in USD; index la
Slide 24: Market observations
Market observations “+ Schroders
Slide 25: Russell 2500 trailing and forward P/Es
Russell 2500 trailing and forward P/Es Valuations went from 30 year lows to above average 25.0 Absolute Trailing P/E* Trailing P/Es 20.0 31 Dec 2010 19.3x 31 March 2010 19.8x 31 Dec 2009 18.8x 15.0 31 March 2009 12.2x (low since 1990) LT average: 15.7x 10.0 5.0 1Q79 1Q83 1Q87 1Q91 1Q95 1Q99 1Q03 1Q0
Slide 26: Small and Mid-Caps now expensive vs. large caps
Small and Mid-Caps now expensive vs. large caps On trailing and forward earnings Russell 2500 vs. Russell 1000 Valuations 1.5 1.7 1.3 R elativ e Forecast P/E Smid Caps Expensive Relativ e Trailing P/E* Smid Caps Expensive 1.4 1.1 1.1 0.9 0.8 0.7 Smid Caps Cheap Smid Caps Cheap 0.5 0.5 1Q79 1Q83 1Q87
Slide 27: Small vs Large Cap
Small vs Large Cap Our expectations our muted Emerging from a bear market – Historically small caps tend to lead for the first two years after a bear market – In year three, small caps tend to deliver single digit gains Coming out of a recession – In the second year after a recession, small caps ten
Slide 28: Appendix
Appendix “+ Schroders
Slide 29: Team
Team People – portfolio manager supported by an experienced team Average analyst experience: 21 years Jenny Jones Robert Starbuck Portfolio Manager Research Director 30 Years Experience 33 Years Experience Insurance, Capital Goods Energy, Materials Cezary Nadecki, CFA John Helfst Steve Kirson, CFA A
Slide 30: Approach
Approach – Understand the business model – Is it sustainable? Business model – What is the size of the addressable market? – Barriers to entry? Competitive advantages? Ideas – Scrutinize the financials Financials Valuations – Special attention paid to cash flows and balance sheets – Analyze valuatio
Slide 31: Research driven-process
Research driven-process Diversified sources of alpha Mispriced Growth (50-60% of portfolio) – Companies experiencing a period of growth due to industry or company factors – This results in solid growth in top and bottom lines – Price understates sales growth OR incremental margin growth OR rising CF
Slide 32: Important information
Important information Risk Warnings: Investments in equities are subject to market risk and, potentially, to currency exchange rate risk. This fund may use financial derivative instruments as a part of the investment process. This may increase the fund’s price volatility by amplifying market events.