Page 14 - DIY Investor Magazine | Issue 40

April 2024 14
DIY Investor Magazine ·
BEYOND THE CATALYST
Investors often wish to see the presence of a catalyst before taking advantage of an evident valuation opportunity, but this can mean missing out on the early gains. Catalysts are, by their very nature, short-term market factors, but it pays to take a long- term view when it comes to equity investing.
Ultimately, financial markets have an uncanny habit of becoming more rational in the end, and the presence of shorter- term valuation anomalies will always present opportunities for disciplined active investors to try to capture.
In the meantime, Jean is keen to point out that shareholders in Schroder UK Mid Cap Fund are being well-rewarded for their patience.
“The fund aims to deliver an attractive total return to shareholders, and we’re confident that it is well-positioned to do that. An important element of that total return comes from the income that flows from the companies in the portfolio.
The current yield is 3.5% and the level of dividend growth has been exceptional too. We’ve delivered 13% annualised growth in the dividend since 2004. This means shareholders are being paid to wait for UK equities to enjoy their moment in the sun again. We believe this will happen in the end, but the timing is, as ever, uncertain.
Longer-term, if we continue to focus on identifying high quality, financially robust, well-managed businesses with solid growth prospects, we believe the market will ultimately value them more appropriately. Investors have historically been well-rewarded by this approach, despite the UK being increasingly unloved over the last ten years. This leaves us feeling very optimistic about what we can deliver in the years ahead, with a more favourable valuation tailwind behind us.”
Click here to find out more about the Schroder UK Mid Cap Fund plc >
Schroder UK Mid Cap Fund plc risk considerations:
The trust Invests in smaller companies that may be less liquid than larger companies and price swings may therefore be greater than investment trusts that invest in larger companies. The trust will invest solely in the companies of one country or region. This can carry more risk than investments spread over a number of countries or regions.
As a result of the fees and finance costs being charged partially to capital, the distributable income of the trust may be higher but there is the potential that performance or capital value may be eroded.
The trust may borrow money to invest in further investments, this is known as gearing. Gearing will increase returns if the value of the investments purchased increase in value by more than the cost of borrowing, or reduce returns if they fail to do so.
FTSE third party data disclaimer: FTSE International Limited (‘FTSE’) © FTSE (2024). FTSE®’ is a trade mark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensor’s. Neither FTSE nor its licensor’s accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.
For help in understanding any terms used, please visit address
https://www.schroders.com/en/insights/invest-iq/investiq/ education-hub/glossary/
We recommend you seek financial advice from an Independent Adviser before making an investment decision. If you don’t already have an Adviser, you can find one at www.unbiased. co.uk or www.vouchedfor.co.uk. Before investing in an Investment Trust, refer to the prospectus, the latest Key Information Document (KID) and Key Features Document (KFD) at www.schroders.co.uk/investor or on request.