What is value investing?

Nick Kirrage and Kevin Murphy took over the £1.4bn Schroder Income fund in May 2010 following the departure of former managers Nick Purves and Ian Lance. Here they explain how the fund is positioned today and why they are passionate advocates of the value approach to investing.

Value investing seeks to outperform the investment market by exploiting human nature. Specifically, it seeks to take advantage of investors’ low tolerance for short-term bad news and a tendency to extrapolate trends when forming future expectations. Our approach enables us to identify companies that have become significantly undervalued relative to their long-term earnings and dividend potential. How do you provide income for investors? We approach income in a slightly different way to many other equity income managers. We look to balance dividend yield with dividend growth and bal...