Schroders has announced the launch of a new flexible global multi-asset solution for South African investors. The Schroder ISF Global Managed Growth portfolio will be domiciled in Luxemborg, with both US dollar and South African rand share classes.
The fund targets a return in excess of a composite benchmark – 60% MSCI AC World Index unhedged to USD, and 40% Barclays Global Treasury Index.
‘This fund seeks to deliver long-term capital growth over five to seven years by investing in a diversified global portfolio of equities, fixed income and alternative assets,’ said Schroders multi-asset fund and product manager, Tim Carr. ‘This means South African investors will benefit from geographical diversification and a smoother return path driven by a dynamic asset allocation – an approach that focuses on actively managing the portfolio through these unprecedented Covid-19 times, with the ability to change, sometimes drastically, how the fund is positioned depending on current market movements.’
At least two thirds of the portfolio will be invested in equities and bonds. The managers will also have the flexibility to invest in cash, indirect real estate, infrastructure and commodities. Physical commodities, alternative investment funds and private equity are however excluded.
The fund will be co-managed by the multi-asset team of Ugo Montrucchio and Michael Devereux.
Montrucchio (pictured above) has 13 years of portfolio management experience. He joined Schroders in 2013, with previous experience at BlackRock, Barings Asset Management and Barra International.
Devereux (pictured below) joined Schroders in 2012. He is currently head of the currency risk premia team in the firm’s multi-asset strategic investment group.
Dynamic asset allocation will be a key feature of the portfolio.
‘With lower expected returns from equities and bonds over the next 10 years, as well as a break down in the traditional negative correlation between the two asset classes, the 60/40 approach may face some challenges going forward,’ said Devereux.
Montrucchio said that it therefore makes sense for investors to spread their exposure across multiple asset classes.
‘With global growth and SA GDP forecast to be the lowest since the 1930s, institutional investors can no longer rely on one or two asset classes to generate the type of returns that have been seen in the past,’ said Montrucchio. ‘Financial markets are also highly volatile which means portfolios that incorporate a means of protecting returns are likely to be more palatable.
‘To meet these needs, institutional investors have increasingly been turning towards global multi-asset funds that are genuinely diversified but also nimble enough to react appropriately to a constantly evolving market landscape.’