Fund manager Schroders has raised $6.5 billion (€6 billion) for a multi-asset income fund it launched three years ago on the back of flows mainly from Italy, Germany and France, the company says.
The Schroder ISF Global Multi-Asset Income has returned 6.3% per annum since its April 18, 2012, inception. The fund aims to deliver a sustainable annual income of 5% with an annual return target of 7%.
Aymeric Forest and Iain Cunningham manage the fund, and say it has also seen significant flows from Asia, the Middle East and other parts of Europe.
Forest, who is also Schroders’ head of multi-asset investments Europe, says yields are expected to remain low in the current moderate growth environment and as a result some investors are taking more risk in their search for income.
The fund invests directly in a range of liquid asset classes such as equities, investment grade bonds, infrastructure and emerging market debt, with a maximum of 10% in liquid, listed alternatives.
Equities are the managers’ preferred asset class, which they say require careful risk management in periods of heightened volatility.
They are targeting equity markets that should continue to benefit from loose monetary policy – Europe and Japan – while tilting the portfolio away from regions that face a direct (US and UK) or indirect (emerging markets) headwind from tighter monetary policy.
Within fixed income, they have rotated some of the exposure into US and European high yield as “we move towards a US rate hike”.
Forest says: “Looking forward, we expect our central scenario of meaningful divergence in regional monetary policy and asset class performance to remain, as the majority of central banks maintain an accommodative policy while the Federal Reserve moves closer towards tightening policy.”
The divergence in monetary policy should be accompanied by higher volatility, Forest adds.
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