Schroders has launched an actively managed Australian credit strategy, designed to meet the needs of investors looking to diversify their allocations to equities or term deposits while preserving capital.
The fund manager said it would tap the often elusive universe of Australian high-yield credit to achieve this.
Namely, the Schroder Australian High Yielding Credit Fund seeks to generate returns of 2.5 to 3 percent above the cash rate over the medium term and provide daily liquidity unlike term deposits.
While the fund has existed since 2001 as an allocation within the firm’s fixed income and multi-asset strategies, Schroders has confirmed that it is now available to retail investors as a standalone product for the first time.
Helen Mason, who will manage the fund, said the strategy addresses the need for a higher yielding income option beyond traditional equity and cash products, while seeking to avoid the liquidity issues associated with private equity, structured and private debt markets.
“The intended outcome of this strategy is a diversified portfolio of investment grade credit securities with the potential to generate consistent returns in excess of cash and term deposits, but with lower volatility than equities,” Mason said.
Schroders added that the fund can invest across the senior, subordinated, rated and unrated credit universe in Australia.
“After years of near-zero rates, yields have been restored and fixed income assets are returning to play. Inflation remains persistent while growth and employment hold up, forcing central banks to keep rates at low levels. high levels,” Mason said.
“The fund integrates top-down and bottom-up views to identify the most attractive assets to own at any given point in the cycle and aims to provide attractive income opportunities, providing daily liquidity while effectively managing default risk.
“It has the flexibility to invest across the Australian credit universe, unconstrained by benchmarks, to capture returns with properly managed risk.”
According to Mason, the fund returned 11.01 percent annually over the past year and 2.80 percent annually over the past five years.
Earlier this month, Schroders appointed Richard Oldfield as its new group chief executive, following the departure of Peter Harrison, effective November 8.
It was announced in April that Harrison would retire, having been appointed group chief executive in April 2016. He initially joined the fund manager in 2013 as global head of equities, then worked as global head of investments .
