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Schroder UK Alpha Plus: How Richard Buxton and Philip Matthews compare

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Jupiter’s Philip Matthews has been named as Richard Buxton’s successor on the Schroder UK Alpha Plus fund. How do the two fund managers compare?

Matthews is currently the sole manager of the £366m Jupiter Growth & Income fund and co-manager on the Jupiter Income and Jupiter UK Alpha funds. He will join Schroders in October, while Buxton departs in June.

Hargreaves Lansdown senior investment manager Adrian Lowcock says: “Generally, there’s quite a bit of difference in style so we’ve not got a direct replacement taking on Buxton’s fund.

“From that point of view, it’s quite a clean, fresh start – Schroders haven’t gone for a star manager name. This means Matthews might not have that much baggage to carry and won’t be compared continuously with Buxton.”

Looking at the Jupiter Growth & Income fund, Matthews shows strong performance to 16 April this year:

Jupiter Growth & Income cumulative performance to 16 April

Jupiter Growth & Income cumulative performance to 16 April

 
Fund 6.14% 13.61% 23.91% 35.09% 61.62%
5.50% 11.56% 17.09% 25.44% 29.91%
0.60% 1.84% 5.83% 7.70% 24.41%
  94 / 281 70 / 281 40 / 278 52 / 267 22 / 245
2 1 1 1 1

This fund, which targets growth and income, has outperformed Buxton’s growth-focused Schroder UK Alpha Plus fund on a cumulative basis over all timeframes:

Schroder UK Alpha Plus cumulative performance to 16 April

Schroder UK Alpha Plus cumulative performance to 16 April

 
Fund 3.51% 13.58% 21.96% 27.98% 46.12%
5.50% 11.56% 17.09% 25.44% 29.91%
-1.89% 1.82% 4.16% 2.03% 12.47%
  248 / 281 72 / 281 58 / 278 97 / 267 42 / 245
4 2 1 2 1

Looking at holdings, both funds are benchmarked against the FTSE All-Share index and a number of difference can be seen between the two managers.

Matthews is significantly overweight financials while Buxton is underweight this sector. Matthews also runs overweights to healthcare and telecommunications, both of which the Schroder manager is underweight. On the other hand, Buxton is overweight utilities and industrials, where Matthews is underweight.

Funds’ holdings, as at 28 February 2013

Funds’ holdings, as at 28 February 2013

  Jupiter Growth & Income Schroder UK Alpha Plus Benchmark
Financials 31.3% 19.3% 23.6%
Consumer services 13.7% 20.6% 9.7%
Oil & gas 10.4% 6.7% 15.5%
Healthcare 9.8% 6.7% 6.9%
Consumer goods 9.7% 11.6% 14.1%
Industrials 6.8% 9.9% 9.3%
Telecommunications 6.5% 3.9% 5.7%
Technology 5.2% 3.6% 1.7%
Basic materials 4.0% 8.7% 9.8%
Utilities 0.8% 5.5% 3.8%

The two managers run their money in different ways, which could be partially explained by Matthews’ need to focus on income in his fund. For example, Matthews holds more stocks than Buxton, despite running a fund tenth the size of Schroder UK Alpha Plus.

Funds’ size and number of holdings, as at 28 February

Funds’ size and number of holdings, as at 28 February

  Jupiter Growth & Income Schroder UK Alpha Plus
Size of fund £366m £3.6bn
Number of holdings 68 36

Lowcock says: “Buxton is a more aggressive manager overall, I think. He runs a more concentrated portfolio. Matthews tends to have about 70 holdings, so is less concentrated and there is more of a focus on income generation. His bias is more towards high-yielding large-cap companies while Buxton has more exposure to large-cap low-yield.

“Matthews is taking on a much larger fund and that will bring its own issues that he will have to address. One of those will be if he will increase the number of assets. You’d expect him to take it higher than what Buxton has been holding but will he still be looking to hold around 70 stocks?”

Lowcock expects to see some changes in the Schroder UK Alpha Plus fund’s portfolio after Matthews assumes responsibility later in the year. This is to be expected, he suggests.

“Matthews is different enough to Buxton that Schroders haven’t brought him in to imitate Buxton’s style and that isn’t what you recruit a fund manager to do anyway – if you ask them to change their style, it usually doesn’t work,” he says.

“Good managers need conviction in their approach and if you ask them to copy someone else’s approach and ideas all you end up with is a manager doing something he doesn’t want to do.”

Sources: FE Analytics, Schroders, Jupiter

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