Schroders Plc · LSE:SDR
Schroders — Schroder UK Mid Cap Fund — FY2024 Earnings Presentation
39 slides from Schroders's earnings presentation, Jan 15, 2025
Slide 1: Annual results to September 2024
Schroder UK Mid Cap Fund plc Annual results to September 2024 15 January 2025 Jean Roche, CFA, Fund Manager Ratings as at 30 April 2024.
Slide 2: 2024 performance: +17.5% share price total return, and record dividend
Schroder UK Mid Cap Fund plc 2024 performance: +17.5% share price total return, and record dividend 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 ori
Slide 3: Calendar year performance
Schroder UK Mid Cap Fund plc Calendar year performance 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 amounts originally invested. Performance % 2024 2023 20
Slide 4: Inflation-beating dividend growth
Schroder UK Mid Cap Fund plc SCP Dividend 2004 to 2024 CAGR* 12.6% Times bigger (x) 10.3 Inflation-beating dividend growth Pint of beer price Pint of milk price 3.6% 3.1% 2.1 1.9 House Prices 3.4% 1.9 Past performance is not a guide to future performance and may not be repeated. Annual total dividen
Slide 5: Performance attribution – months to September 2024
Schroder UK Mid Cap Fund plc Performance attribution – 12 months to 30 September 2024 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 amounts originally inves
Slide 6: Outperformance on 1, and 10-year basis
Schroder UK Mid Cap Fund plc Outperformance on 1, 5 and 10-year basis 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 amounts originally invested. Cumulative
Slide 7: Performance attribution – months to December 2024
Schroder UK Mid Cap Fund plc Performance attribution – 12 months to 31 December 2024 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 amounts originally invest
Slide 8: UK Mid caps stand out relative to the global opportunity set
Schroder UK Mid Cap Fund plc UK Mid caps stand out relative to the global opportunity set… FTSE 250 trades on just 11.9x earnings, which is surprising, relative to both history and forecast earnings growth 12m 24 fwd P/E multiple. MSCI Regions. Dates for the last 20 years 22.9 Interquartile Range Me
Slide 9: Also attractive versus the global SMID universe
Schroder UK Mid Cap Fund plc …..and also when we look specifically at the global SMID universe. Total shareholder yield on FTSE 250 is almost 50% MSCI SMID indices 12m fwd P/E1 above that of the S&P 500 22 Interquartile Range Median Current 14.0% 10th - 90th percentile Dividends Gross Buybacks 20 20
Slide 10: M&A is back, and significant premia underline the valuation opportunity
Schroder UK Mid Cap plc M&A is back, as predicted, and significant premia underline the valuation opportunity. Value of completed acquisitions as % of index starting market cap 16% 14% 12% 10% 8% 6% 4% 2% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 20
Slide 11: Fund summary
Fund summary Schroder UK Mid Cap Fund plc Key numbers¹: Past performance is not a guide to future performance and may not be repeated. The value of Net Assets: £236.6m investments and the income from them may go down as well as up and investors may not get back the amount originally invested. Exchan
Slide 12: NEW - The Mid 250 CEO podcast, showcasing Mid Cap successes
NEW - The Mid 250 CEO podcast, showcasing Mid Cap successes 5cd6df42-b0fc-4de8-b5e2-cbe021f1305c@eurprd07 5cd6df42-b0fc-4de8-b5e2-cbe021f1305c@eurprd07 5cd6df42-b0fc-4de8-b5e2-cbe021f1305c@eurprd07 Source: Schroders, September 2024. Past performance is not a guide to future performance and may not b
Slide 13: Important information
Important information Subscriptions for fund units can only be made on the basis of its latest Key Investor Document and Prospectus, together with the latest audited annual report (and subsequent unaudited semi-annual report, if published), copies are available in English and can be obtained, free o
Slide 14: Important information
Important information FTSE third party data disclaimer: FTSE International Limited ('FTSE') © FTSE (2021). FTSE®' is a trade mark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings v
Slide 15: Appendix
Appendix Schroder UK Mid Cap Fund plc
Slide 16: Introduction to Schroders’ UK Small and Mid Cap Team
Introduction to Schroders’ UK Small and Mid Cap Team Bringing different skills to the party Jean Roche Andy Brough James Goodman Fund Manager Fund Manager Fund Manager 25 years’ experience in UK Managed UK Small & CFA Charterholder with 9 Small and Mid Caps. Jean Mid cap Funds for over years’ experi
Slide 17: Categorising our investment universe
UK Mid Cap Equities Categorising our investment universe How we characterise stocks… …resulting in a portfolio of Characteristics of Characteristics of Characteristics of Unique stocks Flex stocks Stocks to avoid – Industry undergoing – Market position/pricing – Industry overcapacity change, for exa
Slide 18: Example of a Unique stock: Games Workshop
Example of a Unique stock Unique Games Workshop Flex Characteristics we look for Games Workshop ticking the boxes Share price (indexed to 100) 250 Strong market position/pricing power Warhammer = “Heroin for middle class nerds”1 230 Very strong business franchise Rich intellectual property – over 35
Slide 19: Example of a Unique stock: Me Group
Example of a Unique stock Unique Me Group Flex Characteristics we look for Me Group ticking the boxes Share price (indexed to 100) Strong market position/pricing power Photo-me brand in photobooths and increasing awareness of laundry 250 Very strong business franchise Own engineers a powerful servic
Slide 20: Example of a Flex stock: Grafton
Example of a Flex stock Unique Grafton Flex Characteristics we look for Grafton ticking the boxes Share price (indexed to 100) 170 Industry undergoing change Top 3 UK merchants have flat to declining asset growth and asset sales 160 150 Company undergoing change International diversification – 50% o
Slide 21: Investment process
Investment process The selling part Promotion to the FTSE 100 Increases Frequent or in industry expensive capacity acquisitions 100 Deterioration in Investment Sell ESG behaviours/ thesis questions around played out sustainability discipline Company Quality of acquired accounting Valuation – Failing
Slide 22: Notable purchases and sales
Schroder UK Mid Cap Fund plc Notable purchases and sales New holdings The opportunity Complete sales Rationale No.1 in UK and Nordics electrical goods market as balance A.G. Barr Valuation Currys sheet continues to improve; AI a driver Lancashire Hargreaves Lansdown Bid approach Superior returns on
Slide 23: Sector positioning
Schroder UK Mid Cap Fund plc Sector positioning As at 31 December 2024 Portfolio Benchmark1 Underweight Overweight Industrials 28.3% 23.3% 5.0% Health Care 6.0% 1.2% 4.8% Consumer Discretionary 25.3% 21.0% 4.3% Basic Materials 5.3% 3.4% 1.9% Utilities 3.5% 2.8% 0.7% Financials 20.4% 20.2% 0.3% Techn
Slide 24: Portfolio positioning
Schroder UK Mid Cap Fund plc Portfolio positioning Top 20 overweight holdings Weight difference % Its business Stock concentration % Cranswick 3.1 Food manufacturer and supplier Top 10 holdings 35.5 Games Workshop 3.0 Fantasy game figurine maker Top 20 holdings 61.7 Just Group 3.0 Retirement income
Slide 25: Portfolio positioning: top holdings
Schroder UK Mid Cap Fund plc Portfolio positioning Top 10 holdings Absolute % Type Investment case Competitor set in very weak position. Eye 2 poultry site likely in next few years. Significant opportunity in pet food Cranswick 4.3 Unique and continental products as CWK spend £100m on capex per year
Slide 26: 2024 – UK Buybacks outpace the US
2024 – UK Buybacks outpace the US... And well ahead of companies in other regions Proportion of large companies which reduced their number of shares by at least 1% 50% UK 40% US Japan 30% France 20% Germany 10% EM 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Past per
Slide 27: What is the UK consumer spending their money on now?
What is the UK consumer spending their money on now? Peering into the basket: Household essentials Detailed monthly retail sales value (Feb 2020=100) 220.0 200.0 204.5 180.0 160.0 140.5 140.0 140.3 135.2 120.0 122.8 120.8 100.0 110.2 104.3 80.0 91.7 60.0 40.0 20.0 Feb-20 Jun-20 Oct-20 Feb-21 Jun-21
Slide 28: Hunting for ‘multi-baggers’ – how the UK beat the US
Hunting for ‘multi-baggers’ – how the UK beat the US Some of these multi-baggers help to explain the Mid 250’s strong track record UK USA Total stocks 816 vs. Total stocks 5,083 No. of stocks No. of stocks 31 185 with 21x return with 21x return Used Bloomberg to screen for companies that – Returned
Slide 29: UK multi-baggers Class of 2024: Who were they?
UK multi-baggers Class of 2024: Who were they? A selection of the UK’s 31 ‘multi-baggers’ in the 21 years to 22 November 2024 (>15% CAGR), all past or present holdings in Schroder UK Mid Cap Plc For illustrative purposes only and should not be viewed as a recommendation to buy or sell. Schroders has
Slide 30: Result: Mid 250 outperformance
Result: Mid 250 outperformance ….of most developed market indices over the last 25 years FTSE 250 ex Investment Trusts vs Large developed markets, Total Return, % 800 FTSE 700 250 S&P 600 500 500 400 300 FTSE 100 200 100 EURO 50 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Slide 31: The UK Equity Market is NOT the same as the UK economy
The UK Equity Market is NOT the same as the UK economy with 74% of the FTSE All Share revenues from outside the UK % Revenues FTSE 100 FTSE 250 ex ITs UK 23.3 44.8 Overseas 76.8 55.2 The UK equity market has a number of global leaders across different sectors and size Positioning shown is for illust
Slide 32: Composition of UK shareholder yield
Composition of UK shareholder yield Shareholder returns significantly bolstered by share buybacks 7% 6% 5% 2% 4% 3% 2% 4% 1% 0% Dividends Buybacks Shareholder yield composition is illustrative. Past performance is not a guide to future performance and may not be repeated. Source: As at September 202
Slide 33: UK is attractive on a total shareholder yield basis
UK is attractive on a total shareholder yield return basis versus other major markets Total shareholder yield 7.0% Dividends Gross Buybacks 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% FTSE 100 FTSE 250 STOXX 600 S&P 500 UK 10 year gilts Instant access savings Past performance is not a guide to future perform
Slide 34: Nobody likes us... Again.
Nobody likes us... Again. Net % of FMS investors overweight UK equities Absolute net % overweight (by asset class) Allocation to UK equities fell 1ppt MoM to net 14% underweight, This chart shows absolute FMS investor positioning (net % the lowest allocation since Apr’24. overweight). Current alloca
Slide 35: Why invest in Mid 250?
Why invest in Mid 250? We know it as the Heineken Index 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 amounts originally invested. Constantly refreshed by A
Slide 36: Gearing
Schroder UK Mid Cap Fund plc Gearing, % 12.0 10.0 8.0 6.0 4.0 2.0 0.0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 (2.0) (4.0) (6.0) (8.0) Source: Schroders, 30 September 2009 to 31 December 2024. Gearing is the ratio of a company's debt-to-equity. Gearing shows th
Slide 37: Discount narrowing?
Schroder UK Mid Cap Fund plc Discount narrowing? 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 amounts originally invested. Discount/Premium to NAV (%) 5.0
Slide 38: We are active: some of our 1-1 company engagements in 2023/2024
We are active: some of our 1-1 company engagements in 2023/2024 As a matter of process, we engage on non-financial matters with UK companies For illustrative purposes only and should not be viewed as a recommendation to buy or sell. Climate Governance & Oversight Environment Human Capital Management
Slide 39: Summary
Summary Mid 250 has Schroder UK mid cap plc Our process and The backdrop for UK Mid outperformed most has outperformed the philosophy is consistent Caps has improved and global developed mid 250 index and proven valuation is supportive of continued markets over the long outperformance of global term
Schroder UK Mid Cap Fund — FY2024 Earnings Presentation on 6ix