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August 2015
Marketing material
Schroder International Selection Fund
European Equity Alpha
Schroder ISF* European Equity Alpha seeks to identify mis-priced
opportunities in pan-European equity securities. The fund exploits these
market inefficiencies through the considered application of extensive,
rigorous and proprietary research. It aims to outperform the MSCI
Europe (NR) index over 3-year rolling periods.
Why invest?
–– Adopts a ‘best ideas’ approach with a strong value bias, which is backed by in-depth,
stock-level analysis
–– Fully diversified across country, sector, company and market cap
–– Takes a flexible, unconstrained approach to find the best opportunities,
Asset class
wherever they may arise
–– Benefits from bottom-up portfolio construction, guided by rigorous company analysis
–– Uses advanced valuation screens to help identify neglected areas of the market
Bonds
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Equities
Alternatives
Investment style
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Key highlights
Conviction and diversification
In order for a stock to have a meaningful contribution to overall portfolio performance, it needs to be
held with conviction. We invest across the market-cap spectrum and take note of any liquidity risks
associated with small-cap companies ensuring this is adequately compensated by the risk/return
profile. The portfolio typically holds 40-50 stocks at any
given time, offering diversification without dilution.
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–– Established, experienced team supported by extensive investment capabilities.
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An unconstrained approach
The fund is unconstrained in approach, and therefore is able to invest regardless of index
allocation. This means that we are able to locate the best opportunities, at any given time.
Portfolio construction has a strong contrarian value bias.
Rigorous, in-depth research
Quantitative screens are used initially to generate investment ideas. The investment team
conducts extensive, rigorous and proprietary research which is aimed at identifying stocks that
trade at a material discount to our assessment of intrinsic value. The majority of our research is
generated by the portfolio management team itself, and supplemented by our extensive team
of analysts. Moreover, the investment team is also able to leverage the research generated by
Schroders’ European and UK sector analysts.
G ro w t h
Fund Manager
Jamie Lowry – European Equity Fund Manager
Jamie took over the management of the fund in 2010, having been the co-manager for the previous three years. He has
been with Schroders for over 8 years, originally joining as an equity analyst on the European Equity Team. Jamie holds a
degree in Financial and Business Economics from Royal Holloway College, University of London and is a Chartered Financial
Analyst (CFA).
Source: Schroders, as at 31 July 2015.
*Schroder International Selection Fund is referred to as Schroder ISF throughout this document.
Schroder International Selection Fund European Equity Alpha
Investment process
Schroders’ awards
Idea generation – the ‘Search Strategy’
Given the breath of the opportunity set available, the fund employs a multi-faceted approach to idea
generation, including quantitative screening, internal analysts’ ideas and third party research.
2014
Traditional valuation-based screens
The fund employs a number of valuation screens based on academically proven investment
strategies. Examples include low price to historical free cash flow generation and low enterprise value
to sales in relation to historical levels of profitability.
rewarding excellence in business
Special Commendation
Source: Management Today, ‘Britain’s Most
Admired Company’, 2013/2014; Investment
Europe ‘Investment Group of the year’ 2014;
Funds Europe Awards, special Commendation
for European Asset Management Company (AUM
over €20bn); Portfolio Adviser ‘Readers’ Choice
Award’, Fund Awards 2014.
Underperformance screens
Numerous academic studies have shown the existence of persistently underperforming stocks
subsequently becoming superior investments.
Fundamental research
Once an idea has passed the initial screening stage, the fund manager will perform detailed research
into the company, its history, financials and market position.
Fund rating
Determining intrinsic value
The objective of fundamental research is ultimately to determine a company’s intrinsic value.
Source for rating: Morningstar, rating awarded to
the A Acc share class, as at 31 July 2015.
Margin of safety
During the process, significant weight is given to the potential downside risks of each
investment candidate.
Source: Schroders, as at July 2015.
To learn more about Schroders’
Luxembourg domiciled fund ranges, visit:
Risk considerations
www.schroders.lu
–– The capital is not guaranteed
–– Investments denominated in a currency other than that of the share-class may not be hedged.
The market movements between those currencies will impact the share-class
–– Investments in small companies can be difficult to sell quickly which may affect the value of the
fund and, in extreme market conditions, its ability to meet redemption requests upon demand
–– The fund will not hedge its market risk in a down cycle. The value of the fund will move
About Schroders
€437.4bn managed across
equities, fixed income, multi-asset,
alternatives and real estate.
similarly to the markets
–– The fund may hold large positions in a particular investment and if market declines or the
issuer defaults, then the fund will be adversely affected.
An extensive global network of
3,600+ employees.
Key information
ISIN code
LU0161305163
Bloomberg code
SISEEAA:LX
Date of inception
31 January 2003
Fund currency
EUR
Benchmark
MSCI Europe (Net return)
Entry charge
Over 200 years’ experience of
investment markets.
Source: Schroders, as at 30 June 2015.
Up to 5.00% of the total subscription amount
Ongoing charges (latest available)
1
Performance fee
37 offices in 27 countries across
Europe, the Americas, Asia and
the Middle East.
1.91%
15% of the fund’s outperformance of MSCI Europe
Index, subject to high water mark
All information in the table above is for the A Accumulation share class, for further share class information
please see the Prospectus.
Source for rating: Fitch, ‘Highest Standards’
awarded to Schroders on 1 April 2015.
1 The ongoing charges figure is based on the last year’s expenses for the year ending April 2015 and may vary
from year to year.
Important information: This document does not constitute an offer to anyone, or a solicitation by anyone, to subscribe for shares of Schroder International Selection Fund (the
“Company”). Nothing in this document should be construed as advice and is therefore not a recommendation to buy or sell shares. Subscriptions for shares of the Company can
only be made on the basis of its latest Key Investor Information Document and prospectus, together with the latest audited annual report (and subsequent unaudited semi-annual
report, if published), copies of which can be obtained, free of charge, from Schroder Investment Management (Luxembourg) S.A. The Company is a Luxembourg-registered UCITS
recognised in the UK under Section 264 of the Financial Services and Markets Act 2000. There will be no right to cancel any agreement to purchase shares under section 6.7 of
the UK Financial Services Conduct of Business Sourcebook. All or most of the protection provided by the UK regulatory system does not apply to investments in the Company and
compensation will not be available under the UK Financial Services Compensation Scheme. An investment in the Company entails risks, which are fully described in the prospectus.
Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get the amount
originally invested. Schroders has expressed its own views and opinions in this document and these may change. This document is issued by Schroder Investment Management
Ltd., 31, Gresham Street, EC2V 7QA, who is authorised and regulated by the Financial Conduct Authority. For your security, communications may be taped or monitored. w47545