Schroder UK small cap - differences in funds

older_and_no_wiser

I'm looking to diversify part of my pension portfolio into small caps - as it's mainly invested in the "usual" large cap global funds. I've chosen the Vanguard global small cap fund but would like some more UK exposure as the global fund is primarily US focused. I appreciate that the fund reflects the US financial dominance, but I believe that the UK is good value currently and small cap is a good sector to invest in. In addition, my research tells me that an actively managed fund for small caps is a good way to go. Yes, my thoughts only and I don't have a crystal ball!

For the UK fund, the Schroder funds seem to have a good recent performance and their ongoing charges aren't too high. However, there are two quite similar funds:

Schroder UK Smaller Companies (112 companies)
Schroder UK Dynamic Smaller Companies (78 companies)

Both are available in my preferred accumulation flavours as I have at least 10 years of investing before I will need to access my pensions.

From what I read on Morningstar, the Dynamic fund focusses on a mix of growth and value stocks, whereas the non-dynamic fund is purely value based. Recent performance shows that the non-dynamic fund performs slightly better (over the last 6 months). I realise this is no indication of future performance though.

Which one to go for? Does anyone have further information on the funds which could help my decision?

coyrls

You need to read the prospectus for both funds.

Thrugelmir

Don't buy a fund on recent performance alone. UK micro and smaller companies have had a good run since last November. With many share prices now fully rerated. 

I'd suggest taking a look at 

MONTANARO UK SMALLER COS INVESTMENT TRUST PLC (MTU)

A longstanding investment trust that has consistently delivered over the longer term. 

Active management does come at a cost. Smaller illiquid companies aren't suitable for passive tracking either. 

Linton

swleventhal said:

I'm looking to diversify part of my pension portfolio into small caps - as it's mainly invested in the "usual" large cap global funds. I've chosen the Vanguard global small cap fund but would like some more UK exposure as the global fund is primarily US focused. I appreciate that the fund reflects the US financial dominance, but I believe that the UK is good value currently and small cap is a good sector to invest in. In addition, my research tells me that an actively managed fund for small caps is a good way to go. Yes, my thoughts only and I don't have a crystal ball!

For the UK fund, the Schroder funds seem to have a good recent performance and their ongoing charges aren't too high. However, there are two quite similar funds:

Schroder UK Smaller Companies (112 companies)
Schroder UK Dynamic Smaller Companies (78 companies)

Both are available in my preferred accumulation flavours as I have at least 10 years of investing before I will need to access my pensions.

From what I read on Morningstar, the Dynamic fund focusses on a mix of growth and value stocks, whereas the non-dynamic fund is purely value based. Recent performance shows that the non-dynamic fund performs slightly better (over the last 6 months). I realise this is no indication of future performance though.

Which one to go for? Does anyone have further information on the funds which could help my decision?

Whichever one fits best with your other funds.  Do you need more Value as your Growths have become an unacceptably large part of your portfolio? Value vs growth is in my view at least as important as geography.

ColdIron

I've had the Dynamic one since June 2012 when it was Cazenove UK Smaller Companies. Isn't it soft closed?

older_and_no_wiser

ColdIron said:

I've had the Dynamic one since June 2012 when it was Cazenove UK Smaller Companies. Isn't it soft closed?

Nice. Good returns?

older_and_no_wiser

Thrugelmir said:

Don't buy a fund on recent performance alone. UK micro and smaller companies have had a good run since last November. With many share prices now fully rerated. 

I'd suggest taking a look at 

MONTANARO UK SMALLER COS INVESTMENT TRUST PLC (MTU)

A longstanding investment trust that has consistently delivered over the longer term. 

Active management does come at a cost. Smaller illiquid companies aren't suitable for passive tracking either. 

Thanks for that. I did actually check out the long term returns and the funds were showing excellent profits over several years. I also compared them to the Montanaro trust you mention and they are very similar over 5  years. Over 10 years, the Schroder UK Smaller Companies fund outperformed Montanaro significantly.