jones drops growth bias and aims for 5% cash holdings
Investors into the Schroder US Smaller Companies fund can only expect to be a maximum of 95% invested in the market, as manager Jenny Jones seeks to minimise the risk of redemptions in the sector.
Jones, who replaced Ira Unschuld, said she will always run between 5%-7% cash due to her consciousness of the potential for redemptions. Still, since taking over the fund she has reduced the previous cash position from 13%-14% to 9%-10%.
Jones, who took on the fund in December, has made moderate stock holding changes so far and has switched the portfolio's emphasis from growth to value.
She looks for companies with decent cashflows and strong profits which, she said, places her as more of a core value player than Unschuld, who she characterised as 'more core growth orientated.'
Jones has also reduced the fund's retail exposure as she is concerned supply is exceeding demand and that at present company earnings are too positively skewed. As a result she has sold out of four retail stocks Unschuld used to hold.
Both managers, who have known each other for 15 years, worked together on the fund until Unschuld left at the end of December. According to Schroders they have similar investment approaches, fav-ouring bottom-up stockpicking rather than taking top-down macroeconomic calls. Like Unschuld, Jones looks for growth relative to a company's valuation and focuses on finding companies that will perform well regardless of market conditions.
Added to this, a key focus for Jones is seeking positive returns on invested capital in the companies she invests in.
Jones, who manages the fund from the US, follows stocks that are not well known to the general market, aided by a team of three equity research analysts, Robert Starbuck, May Wu and Andrea Bici.
As well as looking at cashflows, valuations, price earnings and strong management, Jones also tries to identify catalysts for a change in undervalued and depressed companies which may see a turnaround in their fortunes.
Hargreaves Lansdown has met Jones and subsequently decided to rate the fund as hold for the next six to nine months due to the similarity in her approach to that of Unschuld.
Meera Patel, senior analyst at Hargreaves Lansdown, said she is confident Jones will do well because of the similarity of her track record to Unschuld's over the past few years on the Morgan Stanley Special Value Fund.
Jones has managed the Morgan Stanley fund since launch in 1996 and over three and five years it has delivered top quartile performance and positive returns of over 28% in the three years to the end of October 2002.
Regular reminders and updates
9 December 2019 deadline
Joe McDonnell joins as head of portfolio solutions (EMEA)
Adviser of the Year - South East
Fidelity Multi Asset CIO's outlook