Schroders succeeds in a tough market
The rocky investment markets of 2011 made life difficult for multi-sector managers, and Schroders was one of the few asset allocators to add value in the adverse conditions, according to Lonsec.
The Schroder Balanced Fund has around 60-80 per cent of its funds invested in growth assets, and is similar to the standard industry fund model, according to Schroders head of fixed income and multi-asset Simon Doyle.
The investment team looks at the asset allocation of the fund roughly every year, said Doyle.
“About a year ago we changed the strategic asset allocation to reduce the bias to Australian equities within the equity component of the portfolio, and we increased the global equity component,” said Doyle.
He acknowledged that many investors in default multi-sector funds have been disillusioned with their returns over recent years.
“The reason the returns are poor is because they’ve had so much equities exposure. If we can get better as an industry at thinking about asset allocation and how we build that into portfolios, that’s a real benefit to investors,” he said.
Doyle was optimistic about the outlook for multi-sector funds in general.
“In the last probably two years we’ve seen a real shift back to thinking about asset allocation as being the key driver of total returns,” Doyle said.
“It’s not just us – you’re seeing more multi-sector funds going to market at the moment. Superannuation funds, research houses – the retail space is really strong at the moment,” he said.
Advance Asset Management came second in the category for its Wholesale Balanced Multi-Blend Fund, replicating its performance from last year.
Advance chief investment officer Patrick Farrell said his team was focused on assessing the big top-down risk factors that are going to shape investment markets over the next five years.
Farrell has overseen a reduction in the equities exposure of the fund in recent years, with a higher allocation to Advance’s alternatives sector fund.
“We still hold equities and they still play an important part in the growth strategy, but we think that we’re not necessarily going to get the return for the risk that we’re taking over the next couple of years,” said Farrell.
The third finalist in the category was ipac, receiving special mention for its Diversified Investment Strategy No. 2.
ipac chief investment officer Jeff Rogers said the fund paid careful attention to diversifying risk premia when it awarded mandates.
“Some bond managers are allowed to credit risk, [whereas] some can only take interest rate risk – instead of having the combined version,” Rogers said.
The benefit of the approach was to achieve a greater spread of risk in the portfolio, leading to a “smoother ride” for investors, said Rogers.
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