Schroders keeps busy with multi-asset coup

The managing director of business development and communications at London-based BestInvest said the strategic partnership constitutes a “broad umbrella” agreement based on overall service levels and commercial terms, which will see Schroders take responsibility for multi-asset mandates on pooled life and pension funds at the end of 2014.

Most notably, the deal allows Schroders to take the commonly used default option in Friends Life company pension schemes, the £3.5bn managed pension fund, under its wing.

It follows a busy time for the investment giant’s multi-asset division, headed up by Johanna Kyrklund, which saw strong net inflows of £6.9bn in 2013, according to Friends Life’s financial results, which it released to the London Stock Exchange last week.

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Schroder’s long-term aim to scale the heights of the multi-manager market was boosted by the high-profile acquisition of Cazenove, which was announced in March 2013. That £424m deal led to a substantial re-branding exercise, whereby Schroders phased out the prestigious Cazenove brand on seven multi-manager funds, including the top-performing Cazenove Multi-Manager Diversity fund.

The £97.5m fund currently appears in the upper echelons of the Investment Management Association Flexible sector, due to strong three-year returns of 34.03 per cent, well above the peer average of 18.78 per cent.

Three existing Schroders funds will also be integrated into the Cazenove range in the second half of this year, while the £61.2m Cazenove Managed Portfolio will be merged.

However, Schroders has been dogged by recent underperformance of several multi-manager funds.

The £43.08m Schroders Multi Manager Strategic Balanced is ranked 117th, out of 119 funds in the IMA Mixed Investment 40-85 per cent share sector. Meanwhile, in the IMA Mixed Investment 20-60 per cent shares sector, the £60.8m Schroder Multi Manager Cautious Managed fund’s three-year return of 8.05 per cent is well below the 21.68 per cent sector average, resting in 111th place in a sector with 122 funds in total, according to Morningstar (calculated bid-bid) .

A spokesman for Schroders said: “There is no rationalisation of this fund range or fund mergers planned at present. There will be changes to the way the multi-asset funds are managed in order to reflect Schroders’ investment approach. However, we are confident that this will best serve the interests of our customers in the future.”


Laith Khalaf, head of corporate research at Bristol-based Hargreaves Lansdown, said the £966m Schroder Managed Balanced fund side was a better option for pension investors than the Friends Life Managed fund, which limits scope for outperformance. He said: “It has returned 47 per cent since launch, 10 per cent above the ABI sector average. Ms Kyrklund uses the asset allocation to protect the fund, expecting managers to contribute to returns by stock selection, making for a tantalising combination of top down and bottom up.”