Following a review, Schroders has issued notices regarding two of its investment strategies, namely the Schroders Global Recovery Fund and the Schroders Sustainable Global Core Fund.
In a statement on the ASX on Monday, the fund manager announced it has decided to close the Schroders Global Recovery Fund - Wholesale Class SCH45, effective 2 September 2024.
The decision, it explained, is “part of our ongoing commitment to optimising our fund range and seeking to ensure we deliver the best investment solutions to meet the evolving needs of our investors”.
“The decision to close the fund was not taken lightly and having considered a variety of factors, including a lack of investor demand, Schroders formed a view that closure of the fund is in the best interests of investors,” the fund manager said.
It confirmed the fund will continue to accept redemption requests from existing unitholders until the termination date and following this date, unitholders can expect their share of the net proceeds to be paid into their nominated bank account within five days.
Meanwhile, investors can also expect to see changes in the Schroders Sustainable Global Core Fund - Wholesale Class SCH31, which will see the fund’s carbon intensity goal removed, and its exclusion wound back to align with Schroders’ exclusion policy on controversial weapons, tobacco production, nuclear weapons, and thermal coal mining.
The fund’s name will change to the Schroder Global Core Fund in line with other longstanding Schroder Global Core strategies.
Explaining the change, Schroders said the criteria for sustainable labelled funds, both in Australia and abroad, has reached “significantly higher standards” since 2020 when the fund was renamed to the Schroder Sustainable Global Core Fund to better reflect the increased level of ESG integration and more stringent exclusions that had been incrementally adopted at that time.
“The direction of travel in Australia indicates stricter requirements for sustainable labelled funds can be expected, albeit without absolutely certainty on either timing or specific implementation requirements, which could more significantly impact the investment universe of the fund,” it said.
“Given the primary focus of the fund is to deliver incremental alpha with limited index-relative risk, excluding larger index stocks on sustainability considerations could become more challenging.
“In light of this, Schroders has reviewed the extent of sustainability-related requirements for the fund’s client base given its broad-based, low tracking error investment objective and concluded that adopting an ESG integrated approach is sufficient.”
It reiterated the fund’s investment objective remains unchanged, with its focus on outperforming the MSCI World ex Australia ex Tobacco Index (net dividends reinvested) after fees with low index-relative risk across a broad range of market environments.
“Aside from the above changes, our investment philosophy and process which focuses on identifying value and quality will remain the same,” Schroders said, adding there will be no adjustment to the fund’s risk or return expectations.
