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Schroders postpones launch of commodities investment trust

Schroders has postponed plans to launch its Schroder Opus commodity investment trust, which was to be to run by its specialist absolute return multi-manager firm.

While Schroders says this was owing to investor sentiment being uncertain about commodities, an expert has suggested the investment trust was too expensive.

Schroders NewFinance Capital said the Guernsey-domiciled Schroder Opus commodity fund would seek to outperform the Dow Jones-UBS Commodity Total Return index by 6-9 per cent per year net of fees over a market cycle.

It said the trust, which was meant to be managed by David Mooney, would provide 100 per cent exposure to the benchmark index, with a 5 per cent tracking error.

Robin Stoakley, the managing director of the UK intermediary business at Schroders, said the total expense ratio would be 2-2.5 per cent, depending on the size of the investment trust.

Investment companies in specialist sectors such as commodities tend to have higher TERs than others.

John Newlands, the head of investment companies research at Brewin Dolphin, says he had been “concerned that the launch might prove difficult”.

“I thought it might struggle given the high annual cost and that there are existing trusts, such as the BlackRock Mining are trading at high discounts, despite an impressive performance,” Newlands says.

Recent research from the Association of Investment Companies shows that 31 per cent of investment companies have a TER of less than 1 per cent, while 62 per cent have a TER of less than 1.5 per cent.

Schroders says it is putting the launch on hold until commodity market volatility has subsided and sentiment improves.

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