Schroders has launched an actively managed Australian credit strategy, designed to meet the needs of investors looking to diversify their equity or term deposit allocations while preserving capital.
The fund manager explained that it will tap into the often-elusive Australian wholesale high-yield credit universe to make this happen.
Namely, the Schroder Australian High Yielding Credit Fund seeks to deliver returns of 2.5 per cent to 3 per cent above the cash rate over the medium term and offer daily liquidity unlike term deposits.
While the fund has been running since 2001 as an allocation within the firm’s fixed income and multi-asset strategies, Schroders confirmed that it is now available to retail investors as a stand-alone product for the first time.
Helen Mason, who will be managing the fund, said the strategy addresses the need for a higher-yielding income option beyond traditional equity and cash-based products, while seeking to avoid the liquidity challenges associated with private equity, structured and private debt markets.
“The targeted result of this strategy is a diversified portfolio of investment-grade rated credit securities with the potential to deliver consistent returns above 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.
“Following years of rates at near zero, yields have been restored and fixed income assets are back in play. Inflation remains sticky while growth and employment are holding up, forcing central banks to maintain rates at elevated levels,” Mason said.
“The fund incorporates top-down and bottom-up views to identify the most compelling assets to own at any given point in the cycle and aims to provide attractive income opportunities, offering 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 appropriately managed risk.”
According to Mason, the fund has returned 11.01 per cent per annum over the last year, and 2.80 per cent per annum over the past five years.
Earlier this month, Schroders named Richard Oldfield as its new group chief executive, following the departure of Peter Harrison – effective from 8 November.
It was announced in April that Harrison would be retiring, having been appointed as group chief executive in April 2016. He initially joined the fund manager in 2013 as its global head of equities and later worked as global head of investment.
