Schroders Australia has announced the launch of two new active exchange-traded funds (ETF): the Schroder Global Equity Alpha Fund - Active ETF (ALPH) and the Schroder Australian High Yielding Credit Fund - Active ETF (HIGH).
ALPH will be made available on the ASX, while HIGH will be available on Cboe.
According to Schroders, ALPH is an unconstrained, diversified global equities fund targeting consistent outperformance with index levels of risk.
Namely, the portfolio includes “long-term structural opportunities and short-term tactical ideas” from a selection of over 4,000 global stocks globally. As such, the ETF looks to provide exposure to various regions, industries and styles.
Natalie Morcos, Schroders Australian head of product, solutions and client delivery, said the underlying strategy has an 18-year track record through multiple market cycles.
“Historically, global markets have outperformed domestic equities over the longer term, certainly for the last decade. For example, the S&P 500 and the MSCI World have outperformed the S&P/ASX 200 by 8 per cent and 3 per cent per annum, respectively, over that period,” Morcos said.
Moreover, ALPH aims to provide capital growth in excess of the MSCI All Country World Index over a three to five-year period.
“While pursuing a style-agnostic approach, ALPH tilts to underweight value and overweight quality and growth, targeting companies that have strong growth prospects yet to be recognised by the market,” Morcos added.
Meanwhile, HIGH invests in domestic corporate and financial credit across sectors, issuers, maturity, ratings grade and capital structure dimensions, including subordinated debt.
Schroders said it combines an attractive yield with the capital protection of institutional grade fixed income.
According to Morcos, the result is a diversified portfolio of credit securities, which have the potential to deliver consistent returns above cash and term deposits while maintaining lower risk and volatility than equities.
“HIGH is an actively managed credit strategy that seeks to deliver returns of 2.5 to 3.0 per cent a year above the cash rate, before fees, all the way through the cycle,” she said.
An “early pioneer” in Australia’s active ETF market, Schroders launched GROW on the ASX in 2016. Looking towards 2025, the fund manager confirmed that it will be continuing to expand its active ETF suite in response to ongoing popularity and client demand.
Commenting on the launch, Schroders Australia chief executive and chief investment officer Simon Doyle said: “These recent Active ETF launches demonstrate how we continue to position ourselves to meet the needs of investors, providing access to products with successful long-term track records that have not been readily accessible to the wider investor community until now.
“In this era of regime shift and increasingly unpredictable times, we have carefully curated a suite of products that can benefit investor portfolios. We are excited to bring more active ETFs to market this year.”
