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Schroder Managed Balanced - investing globally at low cost

Dominic Rowles | Fri 27 April 2018

Investments can go down as well as up so there is always a danger that you could get back less than you invest. Nothing here is personalised advice, if unsure you should seek advice.
  • Exposure to emerging markets has increased
  • Performance was boosted by investments in Europe, the US and emerging markets
  • We believe the fund remains a good way to gain broad exposure to global stock and bond markets

Our View

A balanced portfolio tends to invest in a mixture of assets, including shares, bonds and cash, from across the globe. This can be a great way to help smooth the ups and downs of the stock market, while still offering the potential for good long-term returns.

It takes time, research and energy to build a diversified portfolio. It should also be monitored and rebalanced on an ongoing basis to make sure the level of risk remains suitable.

If you don’t have the time or inclination to build your own, we think a ready-made portfolio such as the Schroder Managed Balanced Fund could be a good option. It mainly invests in a range of Schroders' own funds, providing broad diversification within a single investment.

The fund is run by long-standing manager Johanna Kyrklund with the support of an experienced and well-resourced team at Schroders. They have generated strong performance over both the short and long term, although this should not be seen as a guide to the future.

We think the broad diversification offered by this fund and its low annual management charge (in addition to our platform charge) make it an attractive proposition. We believe it could work as a standalone investment, or form the core of a broader portfolio, and could generate attractive returns for investors over the long-term. That’s why it continues to feature on the Wealth 150+ list of our favourite funds with low charges.

Managers' outlook

Most global economies are currently in good shape, benefiting from strong economic growth and low unemployment. However there are risks on the horizon, according to the fund's manager.

In her view, one of the main risks is Donald Trump’s tariffs on imports to the US, which could develop into a costly trade war between the world’s largest economies. This could prevent exporters trading with some countries and harm global economic growth.

How is the fund invested?

Given these risks, the fund’s exposure to shares was recently reduced and is likely to fall further in the near future. The balance remains held in bonds and cash, which are perceived to be lower-risk options and could provide some stability to the fund during times of uncertainty.

The fund's exposure to shares remains biased to the UK, with top holdings including the Schroder Income, Schroder UK Equity and Schroder UK Alpha Plus funds.

Johanna Kyrklund previously invested in a passive fund, which aims to track the performance of a particular market rather than outperform it, to gain exposure to Europe. It is concentrated towards certain sectors, but now economic growth has returned to the region the manager believes an active approach could offer the potential for superior returns. Active managers have the flexibility to invest wherever they see the best opportunities, rather than having to invest in every stock in the index.

She therefore switched the passive fund into the actively managed Schroder ISF European Large Cap Fund.

Elsewhere the manager believes emerging markets represent better value than most other global stock markets, and exposure to this area has increased. Investors should remember emerging markets are higher-risk than their more developed counterparts. The managers also have the flexibility to invest in derivatives which also adds risk if used.

How has the fund performed?

The fund has returned 61.6%* since Johanna Kyrklund assumed its management in February 2011, while the average fund in the peer group rose 52.7% over same period. Our analysis suggests performance has largely been driven by the manager’s ability to position the fund towards some of the world’s best performing stock markets and business sectors.

Shares outperformed bonds and cash over the past year and a bias towards shares helped the fund outperform its peers. Performance was boosted by the fund’s exposure to European and US shares, which performed strongly over the period. Investments in emerging markets bonds and shares also added to returns. Past performance is not a guide to future returns.

Annual percentage growth
Mar 2013 -
Mar 2014
Mar 2014 -
Mar 2015
Mar 2015 -
Mar 2016
Mar 2016 -
Mar 2017
Mar 2017 -
Mar 2018
Schroder Managed Balanced 6.1% 11.1% -4.3% 20.9% 2.2%
IA Mixed Investment 40-85% Shares 5.6% 10.4% -2.9% 17.6% 1.6%

Past performance is not a guide to the future. Source: *Lipper IM to 31/03/2018.

Please read the Key Features/ Key Investor Information in addition to the information above.

Find out more about this fund including how to invest

Important information - Please remember the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. This article is provided to help you make your own investment decisions, it is not advice. If you are unsure of the suitability of an investment for your circumstances please seek advice. No news or research item is a personal recommendation to deal.


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