Schroders to launch low-cost UK fund
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Schroders is launching a low-cost active fund designed as an alternative to passive investing in anticipation of the RDR.
The Schroder UK core fund will have a maximum total expense ratio of 40 basis points and will target outperformance after fees of 1.3 per cent a year versus its FTSE All-share benchmark.
The fund is set for launch on March 18 and will be the first in a suite from the firm.
Schroder UK core will be managed by the Schroder UK prime team trio of Sue Noffke, Andy Simpson and Jessica Ground, who manage a total of £4.7bn of assets.
The fund will have between 50 and 65 stocks and a 1.5 to 3.5 per cent tracking error. It will have up to a plus or minus 3 per cent active position with the biggest 20 companies in the All-share and up to a plus or minus 2 per cent exposure to all other companies. There will also be up to a 5 per cent plus or minus weighting to each sector.
Ground says: “Targeting 1 per cent net is a good level of performance. That would make it upper quartile in the IMA UK sectors over a longer timeframe, making it an ideal core product.”
Last month, MoneyMarketing.co.uk revealed that JP Morgan was launching a low-cost active fund. The JPM UK active index plus fund is a rebrand of the firm’s UK active 350 offering and has a maximum TER of 0.55 per cent, including a 10 per cent performance fee.
Chelsea Financial Services managing director Darius McDermott says: “While there is always going to be an appetite for good active fund managers, these products offer a strong alternative to the underperformers in the active area.”
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Readers' comments (1)
Andrew Whiteley | 3 Mar 2011 9:06 am
Whilst the low annual fee is to be applauded, what will make this fund any more likely to outperform its benchmark than any other active fund?? I suppose the 1% reduction in AMC will help performance but surely the risk of underperformance is not compensated for by the chance of such a small additional return. This and the JPM fund are simply knee jerk marketing reactions to the rise in popularity of ETFs and Index Tracking funds in the retail sector but I cannot see advisers looking at these as viable alternatives to passive funds where you are certain of achieving benchmark less fee performance....
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