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Schroders charges in to multi-manager crowd

The Schroder S&P strategic balanced fund is the more conservative of the two new unit trust multi-manager fund of funds created by Schroders in conjunction with Standard & Poor&#39s.

The fund aims to outperform the Lipper Balanced Managed sector average by 2 per cent a year after charges by investing in a portfolio of between 12 and 15 funds.

The multi-manager team, headed by Andrew Yeadon, will draw on exclusive research provided by S&P when selecting funds for the portfolio. S&P monitors over 100,000 funds and writes detailed research reports on 1,200 of the best performing funds by sector. Its analysts will produce a shortlist of 200 funds for Schroders to consider and Schroders will also review funds that do not make it to the shortlist. Factors such as track record and management style will be assessed and the fund managers will be interviewed to give Schroders and idea of the strengths and weaknesses of potential holdings.

The multi-manager team will also draw on asset allocation recommendations produced by the group&#39s asset allocation committee. Finally, the multi-manager team will construct the portfolio, blending the best performing funds in a way that achieves the new fund&#39s objective. Once selected, the portfolio is constantly monitored.

Multi-manager is the current buzzword and the problem for any new fund entering the market is how the distinguish itself from those already available. Schroder&#39s relationship with Standard & Poor&#39s may provide a mark of distinction.

The key point for many IFAs looking at multi-manager funds is charges. With an initial charge of 5.25 per cent, an annual management charge of 1.5 per cent plus additional charges on the underlying funds, multi-management does not come cheap.

However, Schroders can negotiate charges on the underlying funds in a way that would be impossible for the average investor to do. If the combined efforts of Schroders and S&P are successful, the performance of this fund should justify the charges.


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