Seven of the 77 UK-domiciled funds run by Schroders have failed to deliver value based on their performance, according to the firm’s assessment of value report.
The largest fund flagged by the company was the £517m Schroder UK Alpha Plus fund managed by Bill Casey. The portfolio has made just 14.3% over the five years to the end of 2025, at a time when the FTSE All Share benchmark has made 73.9%.
Schroders said the period has been difficult for active managers, with last year particularly challenging as the market was “led by the strong performance of an unusually narrow group of large-cap companies”.
However, changes were made at the start of 2025 to address this, including increasing the fund’s typical number of holdings from 30-35 names to 35-40 and upping its allocation to large-cap stocks.
“Despite these changes to the portfolio in early 2025 that sought to reduce the volatility of relative performance, the market’s narrow focus means performance has remained under pressure,” the firm said, adding that the fund is “under review”.
Another UK fund failing to deliver for investors is the £109m Schroder UK Dynamic Smaller Companies fund run by James Goodman.
Over the five-year period the portfolio has lost investors 0.6%, while the Deutsche Numis Smaller Companies plus AIM (excluding investment companies) has made a 13.6%. The wider Deutsche Numis Smaller Companies excluding Investment Companies index is up 36% during this time.
The fund has been hit by the persistent selling of UK stocks, which has disproportionately impacted the smaller segment of the market, while the manager’s preference for “deep value” stocks has also proven a headwind.
“The fund has underperformed against this difficult backdrop, but stock-specific setbacks within the portfolio have also weighed on performance over this five-year period,” the report said.
Despite this poor overall return, the fund is a 23rd out of 43 funds in the IA UK Smaller Companies sector and the firm noted that some stock selections have improved more recently, although the portfolio remains “under review”.
Five other funds were highlighted as “failing to demonstrate value consistently in the performance area”, including Schroder European Smaller Companies.
Managed by Luke Biermann, the £102m fund has made just 9.4% over the five years, placing it in the bottom quartile of the IA European Smaller Companies peer group.
Its quality bias has been out of favour, the firm argued, with banks, insurance and conventional energy all materially outperforming in recent years – areas the fund has little exposure.
“The past five years have been a particularly challenging period for the investment style adopted by the fund. Despite this, the team does not consider it appropriate to materially change the core approach in response to these conditions,” the report said.
Overall, it said the firm “continues to have confidence” that the fund will deliver on its objectives in the future.
The same conclusion was reached for Schroder European Climate Transition, Schroder India Equity, Schroders Capital UK Real Estate and Schroder UK Real Estate Fund Feeder Trust – the other funds highlighted for poor performance.
A further 12 funds were highlighted for operational issues, with some assets in the fund misclassified as being non-taxable.
Source: Schroders assessment of value report
“This issue is not material for clients and is being addressed appropriately, with remedial action in process and controls being enhanced where needed to mitigate the risk of recurrence,” the report read.
A further seven funds were noted for their costs. Among the list below, Schroders found that at least one of the fund’s share classes has higher charges than the majority of funds within its peer group.
Source: Schroders assessment of value report
“This covers nine share classes across seven funds, which represents 0.06% of the total AUM of the funds in scope of our assessment. We are in the process of taking remedial action, which will be communicated to investors in due course,” the firm said.