Schroders' Buxton apologises after 'disappointing' year

Schroders' star stockpicker Richard Buxton has apologised to investors in a conference call after his fund plunged down the rankings this year.

The head of UK equities, who runs the £2.7bn Schroder UK Alpha Plus fund, apologised for the performance of his fund in 2011 after it delivered fourth quartile returns to investors.

He said: "November has been very disappointing in terms of returns and pretty much cements what has turned out to be a very disappointing year in performance terms," he said.

"So I am looking forward to next year - I cannot wait for this year to end, and write it all off," he added.

Buxton said a number of calls had worked against him in 2011 amid growing fears over the future of the eurozone, particularly his avoidance of the big defensive names - such as BP and Vodafone - which have done well as investors sought out safe havens.

"In this environment investor appetite remains extremely subdued, and it remains for pretty safe defensive types of companies," he said.

"Against that backdrop the fund has struggled. I've had insufficient exposure to some of the safer and more defensive counters like Vodafone and BP," he added.

Both BP and Vodafone are two of the fund's largest underweight positions, with the fund 5.2% and 5.3% underweight the index respectively.

Summing up his performance numbers overall he added: "I am only ever first or fourth quartile, and its unfortunate it is going to be a fourth quartile year this year."

Drilling down into the fund's key holdings, Buxton said his decision to avoid HSBC had been positive, but had been more than cancelled out by his holdings in RBS and Lloyds, which have also sold off.

Misys and Logica have also been weak stocks for the fund.

He said a number of other stocks - such as Resolution - had been "unjustifiably weak" in terms of share price performance, and he continues to back both stocks.

Looking into 2012 Buxton - whose fund has shed 2.9% this year versus the average loss of 1.7% in the UK All Companies sector - said banks remained a key play for him.

"We have had an ongoing ticket to add to Lloyds and RBS pretty much since late August," he said.

Buxton added buying the banks now is a "lonely" position, but he continues to back them on the view the market has judged them too harshly.

Buxton has 3% in Lloyds, 3% in Standard Chartered, and around 1.5% in RBS and Barclays.

Asked how he would bounce back next year, Buxton said: "The grave danger of making any radical shift is you will do it at the maximum point of pain, and then get whipsawed by the fact the day you have done it, the ECB steps up to the plate," he said.

"It feels so akin to the periods leading up to sterling's exit from the exchange rate mechanism."

While he has endured a tough 12 months, Buxton remains top quartile over three years, returning 78.2% to investors versus the average return of 54.8%.