By Leo Bland Schroders' UK mid-cap unit trust will have a portfolio of around 50 stocks and is to us...
By Leo Bland
Schroders' UK mid-cap unit trust will have a portfolio of around 50 stocks and is to use an investment strategy that splits the FTSE 250 into three groups of companies
As previously reported in Investment Week, the fund will be run by Andy Brough and his investment team. Brough, who is head of mid and small caps teams at Schroders, also runs the group's UK Smaller Companies unit trust
The three categories of FTSE 250 stocks include 'A' stocks, defined as those with long term growth prospects, representatives of new industries and unique companies. The 'B' stocks consist of mature industries and tactical opportunities. The final group of 'C' stocks will include industries expected to see long term share price decline. The fund will look to focus on 'A' and 'B' stocks to provide outperformance
Brough cited photo booth company Photo Me as an example of an 'A' stock which he said has a monopoly position in the photo booth market and has teamed up with BT to provide access to multi-media facilities on the high street
Brough said: "Mid cap stocks are companies with huge potential. The smaller companies index is a hard training ground and companies that graduate from it to the Mid 250 are almost guaranteed to have a strong business model and an ability to succeed
"The Mid 250 investment team will select companies that present the best opportunities to capture strategic growth and tactical value. This means identifying companies which are eit-her in high growth industries or are attractively valued and some-times a combination of the two
"The Mid 250 includes companies in one of the most dynamic and fastest-growing sectors of the stock market information technology. Around 6% of companies in the Mid 250 are in information technology or are driven by it compared with only 0.8% of the FTSE 100 index
The fund will have a 2% initial charge discount on unit trust investments up to 12 November taking the initial charge to 3.25%. The initial charge is 3.25% for Isa investments and is 5.25% for unit trust investments after 12 November. The annual management charge is 1.5%. The minimum lump sum unit trust investment is £1,000 and is £3,000 for Isas. The minimum monthly investment is £50. IFA commission is 3% initial and 0.5% renewal is available for Isa investments
Schroders rejigged its UK equity investment process last year and changed how it looks at FTSE 100 and FTSE 250 stocks. The investment house set up a team to look at the FTSE 100 and another headed by Brough looking at the mid-cap stocks. This replaced the previous system where Schroders had a team focusing on the top 50 stocks, one on the next 150 and another on the next 200
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