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Schroder US Mid Cap scores with the middle ground

Targeting the middle ground has reaped rewards for Schroder US Mid Cap Fund

Schroder US Mid Cap Fund is one of the strongest performers in the Investment Management Association's (IMA) North America sector over three and five years, over which periods it has also beaten its benchmark, the Russell 2500.

52.27pp

The fund aims for capital growth and income mainly via US mid-cap equities, which account for around three-quarters of the portfolio, according to Morningstar. Small-caps account for nearly a fifth.

Jenny Jones, fund manager of Schroder US Mid Cap Fund, who has 30 years' experience investing, favours companies with strong managements that have a competitive advantage in an industry where new entrants cannot easily gain market share. She is supported by a team of analysts.

The investment team selects three types of companies. Around half the fund is in companies whose revenues and margins have been under-appreciated by the market, and 20 to 50 per cent is in companies with consistent earnings but moderate growth. Up to 20 per cent is invested in short-term turnaround situations where the share price has temporarily been hurt but there is a clear catalyst for the company to return to its former growth profile.

This diversity of companies should help limit risk relative to its sector peers, according to Morningstar, which says the fund's draw downs over the past five years suggest it will show better resilience in falling markets than its peers. This was evidenced in 2008 when the fund's total returns fell nearly less than half of those of its peers'.

That said, the presence of smaller companies means the fund could be more volatile than those focused on large-caps, and Schroder says it may be suitable for investors who are more concerned with maximising long-term returns than minimising short-term losses.

Full data and a PDF factsheet for Schroder US Mid Cap Fund is available here.

SCHRODER US MID CAP A Acc (SZNAA)

PRICE:52.27pSHARPE RATIO:0.08
SIZE OF FUND:£491.7m*1-YR PERFORMANCE:36.30%
No OF HOLDINGS:101*3-YR PERFORMANCE:24.34%
SET UP DATE:27 April 2005*5-YR PERFORMANCE:58.73%
MANAGER START DATE:1 April 2005*TOTAL EXPENSE RATIO:1.68%*
TURNOVER:85.04%*YIELD:0%*
VOLATILITY:6.75MINIMUM INVESTMENT:£1,000*
TRACKING ERROR:4MORE DETAILS:schroders.com

Source: Investors Chronicle as at 23.06.10 *Schroder as at 30.04.10.

Top 10 holdings

HoldingPercentage
Amdocs2.7%
Republic Services2.6%
DeVry2.6%
WR Berkley2.4%
Burger King2.3%
Cullen/Frost Bankers1.9%
DaVita1.9%
NBTY1.9%
Crown1.8%
Reinsurance Group of America1.8%

Source: Schroder as at 30.04.10

Sector Allocation

Source: Schroder as at 30.04.10

SectorPercentage
Financial services17.0%
Technology15.1%
Healthcare13.5%
Producer durables13.2%
Consumer discretionary12.9%
Materials & processing7.0%
Utilities4.6%
Energy3.4%
Consumer staples2.0%
Cash11.1%
Other0.2%