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Schroders cautious fund has benefited from consistent approach

Schroders says a consistent approach and a stable team has helped its multi-manager cautious managed fund outperform the IMA cautious managed sector average in four out of the last five years.

The fund recently hit its fifth anniversary, having returned 32.84 per cent at March 17 from inception on March 15, 2005. It was first quartile in its first three years but plunged to fourth quartile during a difficult 2008, when many of its underlying holdings were hit by forced selling. The fund recovered to first quartile last year due to its positioning for an economic recovery, when it bought aggressively into fixed income, equities, and distressed investment trusts on discounts that have since narrowed.

Head of multi-manager Andrew Yeadon says the fund has been managed in the same way by the same team since 2004, which has helped consistency in performance.

At launch, the intention was to use the wider investment powers of Ucits III to make the most of alternative asset classes such as property, private equity and commodities. This strategy still stands, with holdings in UK and European commercial property that were added last July benefiting from recent market moves.

Yeadon says: “Our take on commercial property is there is a correction of over-zealous overvaluation. It may just be that this will flatten out this year. There are still problems with commercial property, such as market voids. Tenants and rents are under pressure, credit is being rationed and banks will want to offload their portfolios of reposed properties. But if the price is right, you can get a nice income of 6 to 7 per cent, plus the potential for capital values to move up.”

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