Schroder is launching a new fund in the ‘factor investing’ space, which the investment house claimed is particularly suitable for UK defined contribution pension schemes.
The Global Multi-Factor Equity (GMFE) fund will be managed by Schroders advanced beta team, is aimed at providing a “diversified investment strategy which targets consistent outperformance in a risk-controlled way”.
Factor investing has become a popular new way of allocating assets, involving breaking down securities into their fundamental drivers and using those to create a balanced portfolio.
It is an approach that is growing in popularity with Danish pension fund PKA the first institutional investor to restructure its entire portfolio for a factor-based approach in 2012.
GMFE brings investment innovation to the DC saver, targeting additional return compared to a passive equity solution in a risk-controlled way.Tom HorneTom Horne, head of UK institutional defined contribution at Schroders, said: “This value-for-money fund will seek to enable defined contribution savers to benefit from a new way of equity investing.
“Governance and costs are rightly a key focus for UK DC pensions, but this should not come at the expense of returns – the key element which will ensure people can retire with confidence and security.
“GMFE brings investment innovation to the DC saver, targeting additional return compared to a passive equity solution in a risk-controlled way.”
Ashley Lester, Schroders’ head of multi-asset research and co-manager of the GMFE fund, said: “Factor investing is a powerful tool for managing investments. By breaking down assets into factors, it can provide greater transparency of portfolio construction and greater control over the drivers of risk and return.
“While many of the concepts behind factor investing are nearly as old as investing itself, much newer is the idea of bring them together systematically. The GMFE fund aims to allow investors to benefit from the key drivers of market returns in a risk-controlled way.”
However Kevin Bailey, of Wessex Financial Advisers, said that if fund managers concentrated more on the performance of their dog funds rather than chasing trends such as factor investing they would do better by their investors.
He said: “It is just the latest trend. Give it three years and I’ll see how it is done.”
The fund will aim to outperform the MSCI All Country World index over the long term.
rosie.murray-west@ft.com
