Zenith awards “Recommended” rating for Schroders global private equity fund

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Schroders’ recently launched global private equity fund has been awarded a “Recommended” rating from research house Zenith Investment Partners.

The Schroder Specialist Private Equity Fund provides investors with diversified exposure to private equity in a semi-liquid structure, and access to the expertise of Schroders’ dedicated private equity team, Schroder Adveq.

In its research report, Zenith noted the “Recommended” rating was based upon the team’s breadth and depth of experience in the asset class, the experience and calibre of the Investment Committee, its conviction in the comprehensive and repeatable investment process, and benefits from Schroders’ institutional infrastructure.

“Zenith highlights that Schroder Adveq targets the small to medium end of the private equity opportunity set, with the scope to invest in niche and growth stage capital. This ‘small cap’ focus typically results in less competition from large private equity managers, allowing the firm to invest in companies/funds on more attractive earnings multiples.

“While this segment of the market may potentially exhibit higher volatility (and downside risk), Schroder Adveq has a long track record in generating attractive risk-adjusted returns from these types of investments.

“Zenith believes the Fund’s cost structure is highly attractive relative to peers with a competitive management cost and no performance fee. The absence of a performance fee is a differentiating feature, and positions the Fund as an attractive entry point for fee-conscious investors seeking exposure to a semi-liquid private equity strategy.

“Zenith believes the Fund may be used to complement and diversify an investor’s allocation to global equities, and should be funded from the growth allocation.”

Chris Durack, Schroders Australia CEO, says ”The Fund provides investors with access to the often hard-to-reach global private equity markets, offering a broader universe of companies than those listed on public exchanges, including many early stage and growth-orientated companies.

“In a climate of lower interest rates and elevated valuations, investors may be looking for a new way to generate returns or seeking diversification away from traditional listed equity and fixed income markets.

“The Fund’s investment objective is attractive in this environment and it aims to generate an absolute internal rate of return of 10% to 12%, net of fees, over periods of five years and longer.

“While the underlying investments are illiquid private equity assets, the Fund provides investors with the opportunity to access their capital on a quarterly basis (capped at 5% of the net asset value), opening up the opportunity to a greater range of investors.

“The Fund’s investment  and liquidity characteristics, as well as its attractive fee structure, set it apart from its Australian peers.”

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