Schroders’ pioneering objective-based fund reaches 10-year milestone


Simon Stevenson (left) with Simon Doyle.

The Schroders’ objective-based Real Return Fund has passed its 10-year milestone, having launched in the middle of the GFC. It was one of the first objective-based multi-asset funds in Australia.

  • Schroders objective-based multi-asset Real Return CPI+5% Fund celebrates its 10-year anniversary
  • The Fund has been managed by Simon Doyle and Simon Stevenson since its inception
  • The Strategy has averaged a return of 6.95% p.a. gross of fees over the past decade with low levels of volatility

The Real Return strategy sets out to deliver a return of CPI+5% gross of fees over rolling three-year periods while minimising volatility and drawdowns. The strategy has been managed since launch by Simon Doyle, Head of Fixed Income and Multi-Asset, and Simon Stevenson, Deputy Head of Multi-Asset. When it launched on 1 October 2008, the GFC was unfolding and Lehman Brothers had collapsed just two weeks earlier.

At the end of August 2018, Schroders managed approximately $9.2 billion in multi-asset, of which $8.1 billion is in the Real Return strategies, including $6.8 billion in the Schroder Real Return CPI+5% Fund.

The strategy has averaged a rate of return of 6.95% p.a. gross of fees since inception while achieving this with low volatility of 4.8% p.a.

“We decided to revisit the approach to multi-asset investment, which attempts to reconcile an investors time horizon and return objectives with a fixed asset allocation strategy,” says Simon Doyle. “However, in order to target a fixed return over a shorter horizon — of three to five years — you have to adopt a more variable asset allocation.”

With a defined return objective, the strategy is entirely actively managed with a flexible approach to asset allocation across a broad investment universe which includes growth, defensive and diversifying assets. It is benchmark unconstrained and investment decisions are made on a daily basis.

“The strategy sets out to provide stability to an investor, which comprises both a target return, but also seeks to minimise the impact of drawdowns in times of market downturns,” says Simon Stevenson. “Looking back over the ten worst market drawdowns over the past decade since launch, we’ve averaged drawdowns of only 1.8% versus average drawdowns for the ASX200 index of 6.9%.”

The team launched the strategy as a multi-asset ETF (ASX: GROW) and also launched a multi-currency version of the strategy for investors across Asia and Europe.

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