Schroders has launched its first multi-asset income fund which invests primarily in emerging markets in response to growing demand for the product from clients.
Schroder ISF Emerging Multi-Asset Income fund targets an annual distribution of 5 per cent to 6 per cent.
The fund will be managed by Schroder ISF Global Multi-Asset Income, which has £4.3bn of assets under management.
It will be jointly led by Aymeric Forest and Iain Cunningham, and supported by the investment firm’s over 100-strong multi-asset team.
Mr Forest joined Schroders in 2011 from BBVA Wholesale Banking & Asset Management, where he was global head of global investment solutions based in Madrid.
Mr Cunningham, who is CFA Level III qualified, joined the company in 2007 on the graduate programme, after receiving his masters degree in economics and finance from Loughborough University.
Mr Forest said: “Exchange rates need to be actively managed, as a local bond or equity market may appreciate in price while the local currency can depreciate.
“A multi-asset approach can use the dispersion in asset prices created by diverging monetary and economic cycles among emerging market countries and offer potentially lower drawdown risks compared to single asset classes”
The Schroders multi-asset team currently manages £77.3bn of assets on behalf of its clients around the world.
Provider view
Carlo Trabattoni, head of pan-European intermediary business, Schroders, said: “I am delighted with the addition of Schroder ISF Emerging Multi-Asset Income to the multi-asset team’s offering. The multi-asset business at Schroders has continued to grow from strength to strength as clients look for diversified investment opportunities and income solutions.
“The launch of the new fund will offer clients multi-asset diversification benefits within emerging markets. Although emerging markets have experienced recent headwinds, it allows investors with a medium to long-term outlook to seek opportunities in some of the fastest growing economies in the world.”
Adviser view
Robin Keyte, director at Keyte, chartered financial planners, based in Somerset, said: “When people think of a multi-asset fund, they think of something that is invested in equity, commercial property and fixed interest. Normally these funds can be described as cautiously managed. Here, it is possible that investors may think that the fund is a cautious investment until they look under the bonnet and see that it invests in emerging markets, which is far from cautious.
“This fund would not fit with a lot of the clients we have – it is a bit too racy for us. Schroders is probably looking at emerging markets because it offers greater yield compared to established markets.”
He added: “More and more people are looking for income, especially at retirement. Pensioners are looking at other ways of topping up their pensions.”
Charges
1.59 per cent ongoing charge.
Verdict
It is difficult to gauge the level of risk with this product. The fund is diversified, spreading the risk, but will invest primarily in emerging markets – a high-risk investment. A multi-asset fund for income has become increasingly popular. A targeted annual distribution of 5 per cent to 6 per cent could be enough to whet the appetite of many investors, despite the risk.
