Page 36 - Investment Advisor July/August 2021

2021 Asset Managers and Strategist of the Year Awards

Global, International, Emerging Market Equity

Manager of the Year

Schroders Investment Management
International Alpha ADR Strategy

he global economy shrank by 3.5% the team saw “an exceptional opportu-
T last year due to COVID-19, accord- nity” with a large earnings growth gap and
ing to the International Monetary thought it could even double its investment
Fund, with all nations posting nega- in bank stocks over the next 12 months or
tive growth. The downturn was greatest so. “Broadly this [tactic] has played out
outside the United States, particularly quite well, actually,” he explains.
in developing countries. For energy, “We had a view that oil
Nonetheless, the Schroder trading around $20-$30 a barrel just
International Alpha ADR Strategy rose wasn’t going to be sustainable,” Gautrey
23.5% in 2020, topping its index by says. The team thought prices would
12.8% and putting it in the 6th percentile bounce back to $60–$70, which they did.
versus its peers, Envestnet analysts say. The team also integrates environ-
(American Depository Receipts are mental, social and governance con-
a form of equity securities that let U.S. James Simon cerns into its decision-making, and a
investors gain exposure to non-U.S. Gautrey Webber good number of companies it owned
stocks without having to tackle the intri- in 2020 ranking high from an ESG
cacies of foreign stock markets.) Title: Portfolio Title: Portfolio perspective outperformed last year,
The ADR portfolio did well during the manager manager Envestnet analysts stated.
first quarter’s down market and in the Years with Years with “We evaluate material [ESG] factors
second and third quarter up markets, the Schroders: Schroders: for every industry and every compa-
analysts note. It lagged the index slightly 19 years 21 years ny” that the team puts into its models
in the fourth quarter, but still ranked in Years in Years in and valuations, according to Webber.
the top half of its peer group — quite an financial financial “Many of our interactions of the last
achievement given the sharp rotation to services: services: two years with a company like Royal
value stocks, they point out. 19 years 21 years Dutch Shell have been around their
James Gautrey and Simon Webber, strategy for reallocating capital from
who are based in the United Kingdom and the oil and gas business to other assets,”
also serve as subadvisors for the Hartford Investment/asset class focus: he explains. This entails investments in
Schroders International Stock Fund, have Global and International Equities electric-vehicle charging stations and
co-led the Schroder International Alpha Firm headquarters: London the hydrogen industry.
ADR Strategy for 14 years, Envestnet says. The strategy’s five-year average annu-
The large-cap core ADR strategy focus- Year firm was founded: 1804 alized return (2016-2020) is 11.3%, and
es on holdings with “mispriced growth” Number of employees: Over 5,500 the seven-year average (2014-2020) is
or “a growth gap,” which involves invest- AUM as of Dec. 31, 2020: $785.1 billion 7.4%, according to Envestnet. Its emerg-
ments that the portfolio team views as ing-markets exposure has averaged 12%
having better growth opportunities than over the past five years.
the market perceives or values. “We believe Schroders’ edge is their broad research plat-
Recent key holdings for the ADR strategy include France’s form. This includes over 100 local equity analysts, 11 dedi-
Schneider Electric, technology firms like Taiwan Semiconductor cated global sector specialists, a 20-person ESG team and a
Manufacturing and ASML Holding of the Netherlands, commu- 25-person data insights unit,” Envestnet analysts explained.
nications-services provider Tencent Holding of China and con- In addition, the team relies on a proprietary risk management
sumer products and video game maker Sony Group of Japan. framework to assess forward-looking portfolio risk, which
Last summer, a “big move” for the strategy was investing in gives it “a consistent position-sizing framework with a com-
European banks and energy stocks, Gautrey says. For banks, pany’s risk-reward tradeoff in mind.” —Janet Levaux

34 INVESTMENT ADVISOR JULY/AUGUST 2021 | ThinkAdvisor.com