Schroder Small Cap Discovery – fund manager change

Matthew Dobbs, manager of the Schroder Small Cap Discovery fund, will step back from full-time fund management from 1 January 2021. Dobbs' long-term colleagues Robin Parbrook and Alex Deane will take over as co-managers of the fund.

Dobbs has managed Schroder Small Cap Discovery since launch in 2012. He is a highly experienced investor in Asian and emerging markets and has spent his entire investing career at Schroders since 1981.

It's not unusual to see someone step back from fund management after this length of time, though we're pleased to hear he's not immediately retiring. Until late 2021, he'll take on an advisory role, in which he'll offer ongoing support to portfolio managers and analysts at Schroders, and continue to analyse company and market data.

Who are the new managers?

Parbrook is another veteran Asian fund manager. He joined Schroders in 1990 and has spent the bulk of his investing career living in Asia. He has managed the open-ended Schroder Asian Total Return Fund since 2007 and the Schroder Asian Total Return Investment Trust since 2013.

Parbrook has a similar fund management style to Dobbs – he mainly looks for quality companies with high or more sustainable growth prospects, but also invests in some companies that are currently out of favour and have the potential to recover at a later date.

Deane joined Schroders in 2015 and is a global smaller companies and Asian equities analyst. He has since worked closely with Dobbs, and provided analysis support and portfolio ideas over this time. While we are encouraged he has applicable analyst experience, this is Deane’s first fund manager role, and as such he does not have his own track record.

What happens next?

It's always disappointing to see such an experienced investor step back from fund management. Dobbs has delivered excellent performance across his funds over the years*, and built in-depth knowledge of Asian and emerging markets. Past performance isn't a guide to future returns, and remember investing in smaller companies and emerging markets makes this fund higher-risk.

The manager isn't handing over the mantle just yet though. He'll continue to manage this fund until the end of 2020, along with the existing support he receives from his wider team. Succession planning has always been important to Dobbs, and we believe he wants to ensure his funds are left in good hands once he steps back. He has also committed to continuing to work with the new managers until the end of 2021, offering guidance where needed and mentorship to the analyst team.

The new fund managers will use the same long-standing investment process. That said, all investors bring their own personality to a portfolio, so some changes should be expected over time. Both managers have a background in Asian equities, so the exposure to Asian companies could increase marginally over time, though more broadly we expect the fund to continue to focus on both Asian and emerging markets.

This fund is currently on the Wealth Shortlist. Given Dobbs' ongoing involvement with the fund, and the quality of the team around him, we currently retain our conviction and don’t see the need to remove the fund from the list. However, we remain in close contact with the managers, and will continue to monitor the situation and any changes to the fund closely. We will inform investors if our view changes.

Past performance is not a guide to the future. Source: *Lipper IM to 31/07/2020.

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