Schroder Small Cap Discovery Fund

There are three things for investors to consider when deciding whether this fund is for them – firstly there needs to be a belief that the higher growth regions are in emerging and frontier markets, that small cap will out-perform large cap and there needs to be a long investment timeline.

For new investors choosing the right sector or country can be daunting. Often they are drawn to the best performers, and those being advertised. This strategy could work but the reverse is also true with investors being disappointed because they haven’t fully understood the investment strategy.

We have reviewed several Global Growth and Income Funds. Some have a heavy bias to the US, some are more globally diversified and some like Baillie Gifford Global Discovery and Scottish Mortgage are more suited to higher risk investors.

One fund which falls into the global sector is the Schroder Small Cap Discovery Fund and it is one that perhaps has a slightly misleading title. The objective of the fund is to invest in smaller companies that are exposed to the higher growth regions of the world.

This should highlight to investors where the fund invests, which is mainly emerging markets with some frontier exposure with an Asia bias. This means it can act as an alternative global fund alongside others or it can be seen as exposure to Asian and Emerging Markets.

The fund was only launched in 2012 and since then has significantly outperformed the Emerging Market and Asia Benchmark. It has only slightly outperformed the global index.

This fund is aimed at those investors who believe that Emerging Markets (and in particular Asia) will be the growth engine of the global economy over the long term, and that to get the best exposure to this is through the companies of the future.

The update with the managers expands further on what they are doing, and the risks that investors need to consider.

Fund Facts Morningstar

Notes

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