Careful stock selection lies at the very heart of our service. Typically, the greatest price inefficiencies lie at the stock level and an information advantage exists for the investment manager best able to research these fundamentals.
Schroders are ultimately long-term investors. For us, establishing the fair value of a stock/security means being sufficiently disciplined to avoid being caught up in market fashions, and having the confidence to be contrarian when necessary. In focusing on a company's ability to generate sustainable value and earnings growth, we examine its earnings not only quantitatively, but also qualitatively. We then meet the company's managers in order to ensure that we fully understand their market and business strategy. We believe that, over time, the mis-pricing of stocks versus fair value will be recognised by the market, and that our long-term approach to research will lead to long-term outperformance.
We believe that the most effective way to exploit market inefficiencies is to use a diversified set of long-term investment decisions. Here again, fundamental analysis is the key to our approach.
When selecting bonds, our investment professionals take small and frequent investment decisions across the widest possible range of uncorrelated opportunities. Our primary objective is to extract a proportion of outperformance from duration, yield curve, sector allocation and security selection. In doing so, we broaden the investible universe and help deliver an optimal combination of potential risk and return for our clients.
Our asset allocation recommendations are made by a team of senior investment professionals drawn from each asset class. The members of this team then carefully consider the outlook for financial markets, subsequently setting load differences against a global balanced benchmark to establish our 'house view'.
Schroders has a global network of experienced analysts who identify the fair value of companies in a disciplined and all-encompassing way. Enabled by the scale of our global network, regular contact with company managers is critical to this process. Ultimately, strong interaction and open discussion among our professional analysts and fund managers remains central to our success. Research is conducted in specialist teams, with clearly defined areas of expertise and accountability. The sharing of research around these teams enables our investment professionals to compare markets and monitor industry trends. In bringing their local expertise to our global sector teams, our analysts have developed a proprietary software tool ? the Global Research Investment Database (GRID). GRID is how we efficiently distribute in-house and external research to all investment professionals.
