- The fund taps into the expertise of several experienced managers
- It provides a high level of diversification in one convenient investment
- It's performed much better than its peers over the long run
- This fund is on the Wealth Shortlist of funds chosen by our analysts for their long-term performance potential
How it fits in a portfolio
The Schroder Managed Balanced fund mainly invests in funds run by other managers at Schroders and provides exposure to a broad range of assets including global shares and bonds. We think this fund could form the core of a broader portfolio aiming to deliver long term growth, or add some stability to a portfolio mostly invested in shares.
This fund is managed with a team-based approach, with Johanna Kyrklund and Remi Olu-Pitan serving as lead managers.
Kyrklund is Chief Investment Officer and leads Schroders' Multi-Asset Investments division. She joined the company in 2007 and has specialised in asset allocation strategies throughout her career. Olu-Pitan started her career in 2006 when she joined Schroders. She's quickly risen up the ranks and now serves as fund manager on this fund, and a small number of other ones. In practice. Olu-Pitan handles the day-to-day management of the fund, and Kyrklund helps with asset allocation to balance with her other commitments.
We have met both managers on numerous occasions over the years and believe they are dedicated individuals who are passionate about what they do. They also benefit from the support of an investment team we believe is one of the best resourced in the industry.
This is a 'fund of funds'. The managers primarily invest in funds run by other talented Schroders fund managers, such as Martin Skanberg and Nick Kirrage, although they can also invest outside of the Schroders range where necessary. Collectively those managers invest in hundreds of different companies and bonds. This means the portfolio offers plenty of diversification.
Kyrklund heads Schroders' highly experienced Asset Allocation team. They meet regularly to decide how much to invest in different areas and assets. In forming their views, the Asset Allocation team leverage analysis and insight from a number of specialist in-house teams.
They tend to favour shares when the economic environment is positive. But in times of stress, they shift to more diversified assets, such as bonds and cash, aiming to minimise losses.
Once the Asset Allocation team has recommended where and how much to invest, the managers seek to identify several different funds that reflect those views. Every fund must be expected to enhance returns or reduce risk to justify its place in the portfolio.
When the coronavirus crisis struck earlier this year, the managers acted quickly to reduce exposure to funds investing in areas that are sensitive to the health of the economy, both in the UK and Europe. In contrast, they added exposure to bonds, which tend to provide some shelter during periods of uncertainty. When they began to feel the markets had bottomed, and it was clear that governments and central banks around the world would step in to ease the pressure on businesses and individuals, the managers reduced investments in bonds and added equity exposure by increasing investments in US funds with a focus on high-quality companies.
The managers also recently added to funds with exposure to specific themes and trends, which they think will help deliver stronger performance over the long term. Examples include Schroder ISF Global Cities Real Estate, which invests in companies that own property expected to benefit from rising urbanisation.
Please note that the managers' freedom to invest in high yield bonds and derivatives adds risk.
Schroders is a multinational asset management company that employs hundreds of investment professionals across the globe. The managers of this fund can tap into that experience and local knowledge to help them make investment decisions. Schroders is home to many high calibre fund managers so Kyrklund and Olu-Pitan have plenty of good funds to choose from.
The lead managers have both remained loyal to the company for well over a decade, and the broader team has remained stable too. They're all incentivised in a way we think aligns their interests with those of long term investors.
Schroders recognises the importance of integrating environmental, social and governance (ESG) considerations into their research and investment decisions. The Schroders Sustainability Team runs an ESG accreditation scheme, and each investment team is required to achieve accreditation by the end of 2020.
To achieve accreditation, investment teams must produce a paper which sets out the role that ESG plays in their investment philosophy and process, and it must be clear that ESG analysis is systematic and rigorous. They must also demonstrate the impact this work has on their portfolios.
All but two of the funds held in the portfolio integrate ESG analysis, and the two remaining funds are expected to achieve ESG accreditation shortly.
This fund is available at an annual ongoing fund charge of 0.31%, after a 0.27% discount available through the HL platform. Before the discount the charge is 0.58%. We think the fund is attractively priced compared to its peers in the IA Mixed Investment 40-85% Shares sector. The fund discount is achieved through a loyalty bonus, which could be subject to tax if held outside of an ISA or SIPP. The HL platform fee of up to 0.45% per year also applies.
The managers aim to deliver performance that doesn’t stray too far from the broader IA Mixed Investment 40-85% Shares sector. Overall, the fund's done a good job of steadily outperforming the sector since launch in 2007. There are no guarantees that this will continue though, and there have been periods where performance has varied significantly from the benchmark.
The fund also beat its peers in the IA Mixed Investment 40-85% Shares sector over the past year. Exposure to US shares provided the biggest boost, and Asian and European shares did well too. In contrast, a focus on UK shares, which underperformed their overseas rivals, dragged on returns, although past performance is not a guide to the future.
|Annual percentage growth|
| Oct 15 -
| Oct 16 -
| Oct 17 -
| Oct 18 -
| Oct 19 -
|Schroder Managed Balanced||16.9%||9.4%||-2.2%||7.1%||1.9%|
|IA Mixed Investment 40-85% Shares||12.7%||10.1%||-1.9%||8.1%||-1.1%|
Past performance is not a guide to the future. Source: *Lipper IM to 31/10/2020.