The fund aims for total returns, comprising growth and income, by investing globally in the best opportunities across government bonds, investment grade corporate bonds, high yield corporate bonds and emerging market debt issued by companies and governments. Derivatives can also be used to reduce risk, with 80 per cent of the portfolio hedged back to sterling.
Schroders believes this type of fund will appeal to investors who are looking for diversification from equities and for higher returns at a time when interest rates and yields on money markets and government bonds in the west are low.
Lead manager is senior portfolio manager Gareth Isaac, with head of global macro Bob Jolly the alternate manager. Isaac joined Schroders last year from GLG where he managed the firm’s core plus sterling bond, total return bond and gilt funds. He was previously a senior fixed income manager at SG Asset Management. Jolly also joined Schroders last year, having previously been head of currency, UK fixed income and global sovereign at UBS Global Asset Management. Prior to this, he spent over two decades at Gartmore.
The dynamic asset allocation between different parts of the fixed income market is the key strength of this fund because each part can outperform at different times. Isaac and Jolly’s previous experience of investing in fixed income and making asset allocation calls within these markets should stand them in good stead and they have identifiedquality corporate bonds and high yield bonds as areas which currently provide good value.
The risk profile of this type of fund can vary depending on when and where it is investing in the fixed income spectrum, which may make this type of fund unsuitable for some investors. Competition can also be expected from more established funds in the same sector, including Invesco Perpetual and M&G.