Banking

Schroder Investment Solutions to launch income and defensive funds

MPS and multi-asset arm SIS, which was launched by Schroder Investment Management in April this year, will add Schroder Defensive Managed to its suite of funds. It will be managed by Schroders’ multi-asset team, which is headed up by CIO Johanna Kyrkland.

The portfolio will be managed on a strategic asset allocation basis, with assets divided into three buckets – those that protect against inflation, those that generate growth and those that are defensive. The aim of the portfolio is to provide cautious investors with a product that still provides exposure to risk assets.

Alex Funk, chief investment officer of SIS, told Investment Week: “The fund has what we call a cash overlay protection built in. This means that, when volatility starts to spike based on our economic overview, we will begin to add more cash into the portfolio – effectively capping some of that volatility.

“We are looking not to lose more than 10% in any rolling investment period.”

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Elsewhere, the Schroders Multi-Manager Diversified Income fund will be restructured and renamed the Schroder Income portfolio, to be managed by Funk. It will aim to provide investors with income of 3-5% over rolling five-year periods on an annual basis through the use of third-party funds.

Meanwhile, following the launch of SIS, several multi-manager diversity funds will be merged into other Schroder funds available at a lower cost.

It was announced last month that Graham Ashby and Duncan Green were to run the newly-named Schroder UK Multi-Cap Income fund, formerly the Schroder Multi-Manager UK Growth fund.

The Schroders flagship Multi-Manager Diversity fund will remain unchanged in both management and process.

“The philosophy around [the Schroder Income portfolio] is to use active managers in inefficient markets who are in highly-connected positions, in order to generate that alpha component of the total return; then combine this with passive vehicles in more efficient markets based on our overall economic view,” Funk added.

The management fee of the funds will be 20 basis points and, while third-party management costs will vary, the team expects the total cost to come in at 80 basis points.

Gillian Hepburn, Schroders head of UK intermediary solutions, said: “In one of our adviser surveys from earlier this year, we found that 20% of respondents were increasing their use, or have increased their use, of outsourced solutions over the last year. It is clearly an ever-expanding market.

“For us, it is about making sure that we deliver the broadest range possible to ensure that we cover all the different client outcomes that are required.

“We have launched three different ranges covering different styles across our model portfolios, and the two sets of funds, and now what we have to do is keep pace in terms of developing our proposition and look to further areas where there is client demand.”

Doug Abbott, Schroders head of UK intermediary, added that SIS had already experienced strong demand from advisers, having increased in AUM from £4bn to £4.5bn since its launch.

“We have had real success in terms of signing up new advisers and with ensuring our model portfolios are available across major platforms in the UK.

“Now, we are expanding our range through the launch of two funds – an income fund, and a cautious fund. We are also looking to consolidate a couple of our existing funds into the range as well.

“The important point to emphasise is just how seriously we are taking this business, and how important we believe it is to bring a strong range of solutions to UK advisers.”

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