February 2016
Monthly Report
Schroder Global Blend Fund
Performance to 29 February 2016
Relative to MSCI AC World ex Australia
Performance calendar year
Performance rolling periods
Total returns (AUD)
YTD
2014
2013
2012
2011
2010
Fund (Gross)
-3.03
+8.66
+13.36
+46.29
+14.51
-7.04
MSCI AC World ex Australia
-4.87
+10.04
+14.10
+43.24
+14.48
-7.24
Excess (Gross)
+1.84
-1.39
-0.74
+3.05
+0.02
+0.20
Fund (Net)
-3.18
+7.60
+12.19
+44.72
+13.28
-8.03
Excess (Net)
+1.69
-2.44
-1.91
+1.49
-1.20
-0.79
Total returns (AUD)
Fund (Gross)
1 month
3 mths
FYTD
1 Year
3 Years
p.a.
5 Years
p.a.
SI p.a.*
SI Cum*
-0.44
-5.40
-3.55
-3.08
+18.06
+12.05
+11.74
+99.63
MSCI AC World ex Australia
-1.64
-7.07
-4.38
-3.61
+17.34
+11.53
+10.28
+83.97
Excess (Gross)
+1.20
+1.68
+0.83
+0.52
+0.72
+0.52
+1.46
+15.67
Fund (Net)
-0.52
-5.63
-4.17
-4.02
+16.86
+10.88
+10.57
+86.97
Excess (Net)
+1.12
+1.45
+0.21
-0.42
-0.48
-0.64
+0.29
+3.00
Relative to MSCI World ex Australia
Performance calendar year
Performance rolling periods
Total returns (AUD)
YTD
2014
2013
2012
2011
2010
Fund (Gross)
-3.03
+8.66
+13.36
+46.29
+14.51
-7.04
MSCI World ex Australia
-4.87
+11.80
+15.01
+48.03
+14.14
-5.34
Excess (Gross)
+1.84
-3.14
-1.65
-1.74
+0.36
-1.70
Fund (Net)
-3.18
+7.60
+12.19
+44.72
+13.28
-8.03
Excess (Net)
+1.69
-4.19
-2.81
-3.30
-0.86
-2.69
1 month
3 mths
FYTD
1 Year
3 Years
p.a.
5 Years
p.a.
SI p.a.*
SI Cum*
Fund (Gross)
-0.44
-5.40
-3.55
-3.08
+18.06
+12.05
+11.74
+99.63
MSCI World ex Australia
-1.70
-7.04
-2.84
-2.08
+19.32
+12.89
+11.43
+96.24
Excess (Gross)
+1.26
+1.64
-0.71
-1.00
-1.26
-0.85
+0.31
+3.40
Total returns (AUD)
Fund (Net)
-0.52
-5.63
-4.17
-4.02
+16.86
+10.88
+10.57
+86.97
Excess (Net)
+1.18
+1.41
-1.33
-1.94
-2.46
-2.01
-0.86
-9.27
Past performance is not a reliable indicator of future performance. The difference between the fund and benchmark returns may
not equal stated excess returns due to rounding. *Since Inception are from 08 December 2009. Calendar year return in the year of
inception is from 08 December 2009. The MSCI AC World ex Australia Index includes stocks of all the developed markets as
defined by MSCI whilst the MSCI World ex Australia Index incorporates both developed and emerging markets.
Portfolio characteristics
As at 29 February
2016
Tracking error*
Active share
Number of stocks
Portfolio size
Source: Schroders, *Style Research
Page 1
Fund
1.6%
MSCI AC World ex Australia
N/A
73.3%
481
N/A
2411
$A1,515m
N/A
Monthly Report
February 2016
Schroder Global Blend Fund
Monthly commentary
Market update
January’s market panic initially looked set to continue in February, until investors regained some poise
mid-month and markets ended the month down 0.7% (in US dollar terms). Year to date global equity
markets are still significantly off (-6.7%), with Emerging Markets down by almost exactly the same
amount. Value stocks slightly outperformed the broader market, although this modest result may
mask some potentially important changes in market disposition. The main winner over the month was
again Minimum Volatility, which has outpaced the broad market by a significant margin year to date.
The long running bull market in fear, which has pushed these stocks to quite stretched valuations,
shows little sign of abating. Bond proxy stocks (those offering higher yields) also performed well as
falling bond yields producing their usual simplistic reaction in the stock market: buy utilities and sell
banks.
Resources sectors performed well in February. Canada was a standout performer amongst
developed markets, helped in part by the rallying Canadian dollar but also thanks to its outperforming
energy stocks. The commodities-sensitive materials sector, which includes mining companies, posted
the biggest gains over the month, although this reversed only part of its poor performance over the last
12 months. The Japanese market posted the largest decline as a stronger yen (up 7.5% against the
US dollar in the month) dampened sentiment. Foreign investors were heavy sellers amid doubts
about the success of “Abenomics” and concerns about the continued slowdown in Chinese and global
growth. Eurozone equities also lagged the broader market in February. Banks came under pressure
amid some disappointing earnings and concerns about the “lower for longer” interest rate environment
that adversely impacts net interest margins. More broadly, financials was the worst performing sector
globally, hit by a mixture of financial market turbulence, earnings disappointment, and regulatory
pressure and fines.
The weaker US dollar aided the outperformance of emerging markets over the month – the MSCI
Emerging Markets index registered only a marginally negative return in US dollar terms. Expectations
for stimulus measures in China spurred a rally in commodity-linked stocks (which helped Latin
American equities in particular) while a higher oil price supported returns in UAE and Qatar.
Fund
commentary
Over the month the QEP Global Blend strategy saw strong outperformance relative to the indices, with
contributions across the majority of regions and sectors. In the US, cyclical sectors consumer
discretionary and technology provided the biggest tailwind. In the former, our holdings in retail and
consumer durables did particularly well, and in the latter it was positions in hardware and IT services.
The materials sector was a positive for relative performance, particularly thanks to our holdings in
South African mining companies. Positions in the chemicals industry also helped Switzerland to
become a key country contributor. Our avoidance of the cohort of expensive growth stocks in the US
that drove the market in 2015 also provided a small contribution as they underperformed this month.
We maintain our exposure to the industrials sector, which offers attractively-priced, high quality
opportunities. Elsewhere in cyclical sectors we hold a broad range of consumer discretionary stocks
with a preference for companies which are well-established and shareholder-friendly in industries such
as retail, media and auto component makers. In technology our exposure focuses on the less
glamorous and more attractively-valued 'mature' technology stocks (e.g. Intel) with strong cashflow
generation.
In defensives we retain our preference for healthcare stocks, particularly in pharmaceuticals and
healthcare equipment. Within telecoms we retain our preference for Japanese, European and
Emerging Market stocks, where dividends are well covered by cashflows. US, UK and Japanese
utilities remain unattractive in our view and we have little weighting.
The strategy’s exposure to financials remains driven first by our view of the quality (risk) of a company
and then the right valuation for any opportunity. Banks offer a broad range of value opportunities –
from high quality but now over-sold simple banks in the US to lower quality but recovering banks in
Europe. Within insurance the recent sell off has created some new opportunities amongst our
preferred high quality companies with a focus on long-term business strength and diversity.
Page 2
Monthly Report
February 2016
Schroder Global Blend Fund
Attribution against MSCI AC World ex Australia*
Sector
February 2016
Information Technology
Consumer Discretionary
Telecommunications
Industrials
Health Care
Consumer Staples
Materials
Utilities
Energy
Financials
-0.20
-0.10
0.00
0.10
Stock Selection (%)
Region
February 2016
0.20
0.30
0.40
0.50
Asset Allocation (%)
North America
Continental Europe
Emerging Asia
Emerging EMEA
Pacific Ex Japan
Emerging Latin America
Japan
United Kingdom
-0.10
0.00
0.10
0.20
Stock Selection (%)
0.30
0.40
0.50
0.60
0.70
Asset Allocation (%)
The attribution analysis shown above is intended to provide an indicative summary of the contributions to relative performance.
The information is generated using Factset, a multi-currency performance analytical system. The estimated attribution Sector and
Region performance is reconciled with and adjusted to the reported official performance figures.
*Effective from 31 January 2016, attribution is presented against MSCI AC World Ex Australia.
Page 3
Monthly Report
February 2016
Schroder Global Blend Fund
Portfolio weights versus MSCI AC World ex Australia*
Sector
As at 29 February
2016
Region
As at 29 February
2016
Market
capitalisation
As at 29 February
2016
Fund (%)
Index (%)
13.6
14.3
5.9
7.2
5.1
7.2
14.8
10.2
1.6
11.3
0.7
7.8
0.3
10.4
12.3
4.5
6.1
4.2
6.4
14.4
10.7
3.2
13.4
3.4
10.9
0.0
Fund (%)
Index (%)
11.2
13.3
3.5
16.8
8.5
46.4
0.3
6.8
9.8
1.6
15.9
8.0
58.0
0.0
Fund (%)
Index (%)
47.8
29.4
17.2
4.9
0.4
69.8
25.6
4.5
0.0
0.0
Active Weight
Industrials
Health Care
Materials
Insurance & Asset Mgt
Telecommunication Services
Energy
Information Technology
Banks
Real Estate
Consumer Discretionary
Utilities
Consumer Staples
Cash
3.1
2.0
1.4
1.1
0.9
0.8
0.3
-0.6
-1.6
-2.1
-2.7
-3.0
0.3
Active Weight
4.5
3.5
1.9
0.9
0.6
United Kingdom
Emerging Markets
Pacific ex Japan
Continental Europe
Japan
North America -11.7
Cash
0.3
Active Weight
Mega
Large
Mid
Small
Micro
-22.1
3.8
12.7
4.8
0.4
The difference between the fund and benchmark weights may not equal stated active weights due to rounding.
*Effective from 31 January 2016, attribution is presented against MSCI AC World Ex Australia.
www.schroders.com.au
email: simal@schroders.com
Schroder Investment Management Australia Limited
Level 20 Angel Place, 123 Pitt Street, Sydney NSW 2000
Phone: 1300 136 471 Fax: (02) 9231 1119
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Page 4
Monthly Report
February 2016
Schroder Global Blend Fund
Page 5