HEAD-TO-HEAD: Blackrock versus Schroders

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Conclusion

Morningstar has awarded the BlackRock fund two stars, describing it as having merit for investors looking for growth-oriented UK equities exposure.

Its bottom-up approach, targeting companies with a competitive advantage or those driving structural change gives the fund a strong growth bias.

Overall, Morningstar noted that given the strategy’s strong growth bias, investors can expect short-term performance that does not marry with the benchmark as well as higher levels of volatility.

The fund has performed well in both absolute and risk-adjusted terms over the long-term, in part due to its overseas exposure, mostly to US growth stocks.

In contrast, Morningstar has awarded the Schroders fund one star, citing the fact that performance has been a bit lumpy with a strong performance in 2020 undone by poor returns in the second half of the following year.

Morningstar also notes that Schroders has a new pair of managers in charge and while their process has potential, their lead portfolio management experience is limited and Morningstar recommends observing them over a period of time.

Morningstar awards both funds with an analyst rating of neutral.

FE Fundinfo, which bases its assessment on a fund’s three-year history of delivering alpha, minimising relative volatility and producing consistent returns, awards both funds one crown.

Poole believes that both funds have similarities in their processes, but BlackRock holds the edge between the two funds.

“Given the preference for the BlackRock fund to implement its ex-UK exposure through the US, we would favour it at the moment. We currently have a more attractive outlook for the US versus Europe and so we see some upside here,” he said.

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