Schroders has launched a new fund focused on alternatives, which is says comes at a “critical” time for investors.
The Alternatives fund will be blended into the firm’s model portfolio solutions range and was announced by Schroder Investment Solutions (SIS), its IFA outsourcing business.
Alex Funk, chief investment officer at SIS called the fund a “technical democratisation” of alternative assets for investors.
He said: “Ultimately, accessing alternative investments or multi asset portfolios is critical. Now, think about some of the traditional alternatives.”
“I think it is a step in the right direction in a world where volatility remains a problem.”
The fund has been in the works for the past 12 months and was launched at the start of September. Schroders has spent the past six weeks getting it on all the necessary platforms.
The fund’s exposures will include real assets, commodities and hedge funds.
Funk said: “There’ll be components in the portfolio that are what we call return enhancing and there’ll be components in the portfolio which we call risk diversifying. And we will manage the exposure to those broad buckets depending on our views as well.”
The fund will also have access to Insurance-linked securities (ILS) which Funk said is “uncorrelated to traditional fixed income markets”.
He added: “We’re basically providing capital to reinsurance companies for these catastrophe risks like hurricanes and so on.
“The reason the bond would move down in price is unrelated to interest rates, but more related to something like hurricane insurance after having to pay out, then you see that you’re getting different returns that you would form traditional fixed income.”
Funk also claims Schroders has managed to reduce the overall cost to clients on the fund by around 29 basis points at a portfolio level compared to if you had invested in alternatives outside of the new fund.
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