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We met with Richard Buxton, the manager of the Schroder UK Alpha Plus Fund, for a fund update and to hear his thoughts
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Investor sentiment is generally quite negative at the moment but Richard Buxton believes we may have already seen the market’s lowest point. Although some companies may still release disappointing results he believes that market conditions will generally improve and that now could be a good time to invest.
The manager believes the chance of a recession in the UK is “very probable”. He also thinks, however, that this tougher outlook is already accounted for in share prices. So if a recession occurs markets may not be as adversely affected as people think.
The recession, he anticipates, will not be as long or severe as the one in the early 1990s. He was also keen to point out that, despite the economic downturn, the UK stock market still rose in 1991 and 1992; so recessions are not always bad for investors.
One sector that has been particularly hard hit is banking stocks, as the problems of sub-prime mortgages are revealed. Richard Buxton believes the news regarding this will not get any worse and he has been selectively investing in some banks, namely Barclays and Royal Bank of Scotland. In his opinion these shares have been “priced for Armageddon” but he believes this is not going to materialise. He sees this as a buying opportunity.
Regarding other sectors; the manager has trimmed his exposure to oil stocks but continues to invest in mining companies. The mining firm Xstrata is his largest position. One area he believes may have further to fall is real estate, so he continues to be wary of this sector. The fund invests predominantly in larger companies and generally he continues to see value in this area of the market.
This is Richard Buxton’s opinion and there are no guarantees that he is correct. However, we believe that you have to invest with managers you can trust and in our opinion Richard Buxton is one of the best managers investing in the UK. Even if the fund experiences volatility in the short term we believe he will deliver over the longer term and it is our belief investors in the Schroder UK Alpha Plus Fund will be well served.
» Key Features of the Schroder UK Alpha Plus Fund
Fund research is provided by Hargreaves Lansdown. Hargreaves Lansdown is an independent broker offering unit trust, stockbroking and other pension and investment services. No news or research item is a personal recommendation to deal.