Schroder Real Return Fund (Managed Fund) A new offering from Schroders (ASX:GROW)

Transcription

1 Schroder Real Return Fund (Managed Fund) A new offering from Schroders (ASX:GROW) September 2016 Introductory presentation Schroder Investment Management Australia Limited ABN Australian Financial Services Licence Level 20 Angel Place, 123 Pitt Street, Sydney NSW

2 Why buy the Schroder Real Return Fund (Managed Fund)? Benefits of diversification Active asset allocation Protection from the market Focus on real returns Available on the ASX SCHRODER REAL RETURN FUND (ASX: GROW) A smarter way to invest 6 A strong track record in multi-asset investing Our core beliefs GROW a new way to think about investing 1

3 Schroder Real Return (ASX:GROW) Key Features Asset Class Benchmark Schroder Real Return (ASX:GROW) Multi-Asset / Objective Based None/Flexible Portfolio ranges Target performance/risk objective Management style Asset allocation ranges Strategy Investment phase Distribution Availability Liquidity Pricing Execution and settlement CPI+5% (before fees) over rolling 3 yr periods, min downside risk Active Growth 0 75% Diversified 0 75% Defensive 0 100% Target return / downside risk focus, flexible asset allocation Accumulation, Pre-retirement and Pension Normally twice yearly Available on the ASX (ASX:GROW) Open-ended fund, issues and cancels units daily Acts as market maker to provide liquidity Expected to trade at a tight spread around inav Live pricing on ASX Settlement via CHESS 75% 75% 75% 100% Fees 0.90% Source: Schroders as at 31 August

4 Schroders One of the largest independent investment managers in the world Long standing heritage, with over 200 years of experience Managing money is our sole business Extensive global network operating in 28 countries Global funds under management: A$617.2bn Australian business funds under management: A$46.9bn Source: * Schroders at 30 June

5 Our Multi-Asset credentials Strong track-record across objective-based and growth strategies 1996 Development of objectivebased investing through the GFC as a result of experience with our Balanced Fund Launch of the Schroder Real Return CPI+5% Fund 2014 Launch of the Schroder Real Return Fund on the ASX (ASX:GROW) Began managing multi-asset in Australia Launch of the Schroder Balanced Fund 2008 Launch of the Schroder Real Return CPI Plus 3.5% for more risk averse investors 2016 Today we manage $9.4bn* in multi-asset in Australia 4 Access to a wide network of global resources with local management and accountability Source: Schroders *as at 31 July 2016

6 Schroders Real Return Strategy Our core beliefs 1 Valuations of asset classes matter just as much as for individual securities 2 Asset allocation needs to be broad and flexible - responding to changing markets 3 Risk is losing money and not meeting investment objectives, NOT volatility 5

7 Schroder Real Return Fund (ASX:GROW) Focused on the things that matter Objectives are focussed on the things that matter for the investor Arbitrary benchmarks are not appropriate in an objective based framework Return Objective CPI + 5% p.a.* Rolling 3 year timeframe Risk Objective Objectives involve both a return target and multi-faceted and intuitive risk measures We see risk as not delivering on these objectives Volatility Acceptable level of portfolio volatility ~ 5% Drawdown Minimise incidence and size Liquidity Aim to ensure intra-day liquidity Efficiency Risk adjusted performance matters Active allocation and stock selection Flexibility across broad range of asset classes Source: Schroders. *Objective is stated gross of fees. 6

8 Return Return Why objective based investing? Real Return provides smoother path of returns Traditional approach Schroders objective based approach 80% 70% 60% 50% 80% 70% 60% 50% 40% 30% 20% 10% 0% 40% 30% 20% 10% 0% -10% % Time Horizon A fixed strategic asset allocation can get investors to their objective over the long term But this comes with significant periods of volatility The "real risk is that a significant drawdown may come at just the wrong time remember the GFC? Source: Schroders. Charts are for illustration purposes only Time Horizon We build portfolios designed to meet investors objectives, rather than use an arbitrary benchmark or fixed SAA All investments are managed to achieve more stable returns with reduced levels of volatility Our approach uses a dynamic and unconstrained asset allocation investment opportunities are constantly reassessed to help negotiate market movements 7

9 Return, risk and drawdown objectives Delivering capital growth whilst managing volatility and drawdowns The team has a strong history managing a Real Return strategy $ 18,000 Cumulative growth of $10,000 since inception of the Schroder Real Return CPI Plus 5% Fund 16,000 14,000 12,000 10, ,000 Sep 08 Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14 Sep 14 Mar 15 Sep 15 Mar 16 Schroder Real Return CPI Plus 5% Fund Professional Class (net of wholesale class fee of 0.90% p.a.) CPI Trimmed Mean + 5% (less 0.90% management fee equivalent) p.a. Source: Schroders, Datastream, ABS. Cumulative performance the Schroder Real Return CPI +5% Fund Professional Class (applying wholesale class fees of 0.90% p.a) since inception. Past Performance is not a reliable indicator of future performance. CPI is measured by the RBA Trimmed Mean as published by the ABS. Performance of the Unlisted Fund is shown to illustrate how a comparable managed fund using the same strategy has performed over longer time periods. Performance of the Schroder Real Return Fund (ASX:GROW) may vary due to differences such as market making activities, variations in implementation strategy and inflows/outflows.

10 How does this compare to a traditional portfolio? Focusing on client objectives Traditional Schroder Balanced Fund Objective Based Schroder Real Return Fund (ASX: GROW) Global Fixed Income, 5.9% Australian Fixed Income, 7.5% Inflation Linked Bonds, 1.6% Cash, 11.4% Australian Equities, 33.8% Cash, 26.1% Australian Equities, 16.2% Global Equities, 12.5% Allocation to growth assets (equity and credit) but controlling downside risk No allocation to property and portfolio duration at 0.7 years due to bond related valuation concerns Objective Based, 10.1% High Yielding Credit, 6.0% Global Equities, 23.6% Mortgages and Floating Rate Credit, 8.8% Global Fixed Income, 8.4% Australian Fixed Income, 14.5% Higher Yielding Credit, 13.6% Cash at 26% as the defensive portfolio anchor and optionality over further valuation improvements Source: Schroders. Please note that these are indicative asset allocation only and may change, subject to market conditions and outlook, and may not add to 100 due to rounding, as at 31 August

11 Where does GROW fit in your portfolio? A flexible, professionally managed, diversified solution Core holding Portion Replacement/complement Growth GROW Defensive Alternatives G R O W GROW A core portfolio in a core satellite approach Replacing a portion of each asset class Replacing/complementing alternative assets Or a cost effective professionally managed whole of portfolio solution 10

12 Trade Market Making The Fund inav Calculation Market Making How it works GROW acts as its own Market Maker: Acts to provide liquidity Issues and cancels units daily Creates a price (inav) to reflect fair value Sets the bid /offers for investors Acts as market maker in order to protect the intellectual property of the fund manager, and alleviates risk of front running At the end of each day, the Fund as market maker either issues or redeems its net position Any gains or losses from the market making process will accrue to the fund (not Schroders) Schroder Real Return Fund (ASX:GROW) Underlying assets Bid inav calculated every 15 seconds Spread Offer Published to web Settlement of transactions Settlement occurs via CHESS like any other exchange traded security Investors buy or sell units in the secondary market Client Buy/sell units at live price Client 11

13 Associated investment risks Investment risks will be influenced by factors such as domestic and international markets, economic conditions, political climates, interest rates and inflation Significant risks which may affect the performance or value of your investment in the Fund may include market risk, equities risk, interest rate/duration risk, credit and company risk, currency risk, derivatives risk, liquidity of investments risk, market making risk and counterparty risk For further details about the risks of investing in this strategy please refer to the Product Disclosure Statement available at 12

14 Disclaimer statement This presentation is intended solely for the information of the person to whom it was provided by Schroder Investment Management Australia Limited (ABN , AFSL ) (Schroders). Units in the Schroder Real Return Fund (ASX:GROW) ( Fund ) are issued by Schroder Investment Management Australia Limited. Past performance is not necessarily indicative of future results and Schroders does not guarantee the future performance of the Fund, the amount or timing of any return from it, or that it will achieve its investment objective. This material has been provided for general information purposes and must not be construed as investment advice. This material has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. Investors should consider obtaining professional investment advice tailored to their specific circumstances and should read the relevant Product Disclosure Statement (PDS) prior to making any investment decisions. The PDS is available at or can be obtained by calling Investment guidelines represented are internal only and are subject to change without notice. Schroders may record and monitor telephone calls for security, training and compliance purposes. 13