HEAD-TO-HEAD: Blackrock versus Schroders

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Investment approach

Both funds have a bottom-up approach to stock picking and have a focus on cash generation and companies with structural tailwinds to drive returns.

Both also have very concentrated portfolios with the Schroders one investing in about 30-35 stocks, while BlackRock typically invests in a similar number, albeit they have recently invested in more than 60.

There are some distinct differences between the funds though. Schroders has more of a mid-cap bias compared with BlackRock, which skews more towards large-cap stocks.

The top three holdings for BlackRock comprise blue-chip names Shell (7.27%), AstraZeneca (4.89%) and RioTinto (4.62%).

In contrast, Informa (4.8%), Kerry Group (4.6%) and Flutter Entertainment (4%) feature among the top 10 holdings for Schroders.

In terms of sector allocation, the focus on companies with structural tailwinds means that consumer discretionary feature heavily for both, comprising 18.6% of BlackRock’s portfolio and a massive 39% for Schroders. Both funds are also overweight the technology and communications sectors.

Conspicuous by its absence for Schroders is energy, to which it has basically no exposure, whereas BlackRock has 7.27% of its portfolio invested in companies from the sector.

In terms of geography, the maximum allocation for both outside the UK is 20%. Schroders’ managers have a background in European equities, which has resulted in a strong allocation to European companies with Ireland having the second largest exposure at 11.9%.

In contrast, BlackRock favours US growth stocks for its ex-UK holdings and is weighted 14.48% towards the US. Schroders’ weighting towards the US is just 1.7%.

“Schroders’ QARP process and mid-cap bias leaves it slightly less growthy than BlackRock,” said Poole.

Fund characteristics

Country allocation:

Source: Fund factsheets, 31 August 2022

Sector allocation:

Source: Fund factsheets, 31 August 2022

Top 10 holdings:

Source: Fund factsheets, 31 August 2022

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