For the six month period to 31 October 2014, Schroder UK Growth’s NAV saw a total return of -6.3%, while the share price returned -8.8% and the discount widened from 5.2% at the beginning of the period to 7.8% at 31 October 2014. These performance figures compare poorly with an equivalent return of -1.6% by the FTSE All-Share Index over the same period. The interim dividend is upped to 2.5p from 2.25p.
Philip Matthew’s manager’s report lists a number of stocks that contributed to the fund’s underperformance of the FTSE All-Share Index including Xaar, the printing technology fund which suffered pricing pressure in China; industrial engineering turnaround specialist Melrose Industries; and online/catalogue retailer N Brown Group. Oil producer, Enquest, was a significant detractor as low oil prices impacted share prices across the oil sector. Other detractors included Thomas Cook Group and Rolls-Royce where earnings expectations have been cut. On the positive side, the overweight holding in publisher and information provider Reed Elsevier was helpful as were overweight positions in pharma companies BTG and Shire. Finally, the Company did not own any shares in Tesco or mining giant BHP Billiton, both of which performed badly.
Following the departure of Julie Dean and the consideration of a number of alternative proposals for the management of the fund, the Board elected to retain Schroders as managers but mirroring the trust’s portfolio on Schroder UK Alpha Plus. The portfolio reorganisation is now complete. The Board says the cost of the transition to this way of managing the portfolio was £1.6m and Schroders will not be getting paid a management fee until late in 2015 to cover these costs.
SDU : Schroder UK Growth transition complete