Schroder ISF EURO Equity A Dis EUR AV |
by Michael Born
Schroder ISF Euro Equity continues to benefit from a large team and a stable process. Although recent results have been less than stellar, as a result of significant style headwinds, we continue to have faith in the longer-term picture, so the People and Process ratings remain Above Average. Lead manager Martin Skanberg has been in place here since 2010 and brings 29 years of experience. He is supported by a 12-strong analyst team. In general, turnover has been somewhat of an issue, and stock selection in certain sectors has been quite poor over the past few years, The current focus on hiring senior experienced analysts may go some way to enhance stability; indeed, we haven't seen departures since 2021. Meanwhile, the large scale of the resources and Skanberg's long-term ability to get the most out of the team result in a People rating of Above Average. The process aims to be style-agnostic, although Skanberg is specific in targeting a combination of valuation anomalies where the market has underestimated growth or margins or names at inflection points. He aims to build a portfolio that is not driven by an overriding view, but will tilt between value and growth depending on where the team finds bottom-up value, and so holds a mix of value and growth names. While execution had been excellent over the longer term, more recent returns have been much more mixed, with considerable underperformance stemming from an overweighting in mid-caps, where the team has historically found the best ideas and believes is the most attractive part of the European market. Performance has been strong over the strategy’s early years under Skanberg, and we saw continuous outperformance in every calendar year as well as first- or second-quartile performance versus the peer group. However, five-year performance has been considerably worse. Although the majority of that can be attributed to the portfolio's mid-cap value bias, we have also seen stock-selection issues. For example, Viaplay was a major detractor over 2022 and 2023, falling on concerns over subscribed growth; Kion was a major detractor over 2022 on concerns about its business model; and Neste and Umicore were big detractors over 2021 when they fell on the back of poor operational performance and falling guidance. Nevertheless, the longer-term numbers since the manager took over in June 2010 through Nov. 30, 2023, are about in line with the benchmark. |
Morningstar Pillars | |
People | Above Average |
Parent | Above Average |
Process | Above Average |
Morningstar reserve its rights to charge for access to these Ratings and/or Rating report. |
Permissions/Reprints E-mail Morningstar |