An alternative to index chasing for objective-based investors

Sometimes, the specific needs of an investor are more important than the ability to beat a benchmark. For that, Schroders has created GROW.
Chris Conway

Livewire Markets

Many funds measure themselves against a benchmark and try to beat it. This is a perfectly valid approach, and those that can consistently beat a benchmark offer a compelling value proposition. 

But beating a benchmark and the volatility that comes with endeavouring to do so are not suitable for all investors, all the time. That is why the Schroder Real Return (Managed Fund), listed on the ASX via the ticker GROW, focuses on the needs of investors and an objective-based approach. 

As Head of Multi-Asset Australia, Sebastian Mullins, explains;  

"We try to make sure that GROW has the same objectives as an individual investor; that is, earn a return above inflation. 
So we have a CPI plus 4% to 5% target over three years gross of fees and try to minimise drawdowns and the frequency of drawdowns to preserve capital".

To achieve these investment objectives, GROW employs the three-fold approach according to Mullins; 

  1. We try to ensure we allocate to asset classes with the best forward-looking dynamics. So best expected returns, lowest probability of loss, and that gives us a robust portfolio with limited downside and hopefully positive upside.

  2. We build diversification within that to ensure that if one of our bets goes wrong, we have a broad suite of investment ideas to diversify that asset allocation. You'll see us investing in asset classes like equities, credit, duration, commodities, and FX to give us a broad range of asset classes. 

  3. Finally, we are very flexible with our asset allocation to ensure we're moving away from potentially vulnerable asset classes and towards asset classes we think are positive. We also have the ability to put hedges in the portfolio.

In the following Fund in Focus, Mullins dives deeper into the strategy behind GROW, in particular the importance of protecting against drawdowns. He also discusses the current asset allocation and two investments that highlight the diversity of the Fund. 

  • Name of fund: Schroder Real Return (Managed Fund)
  • Asset Class: Multi-asset
  • Investment objectives: To achieve a return of CPI plus 4% to 5% p.a. before fees over rolling 3-year periods while minimising the incidence and size of negative returns in doing so. CPI is defined as the RBA’s Trimmed Mean, as published by the Australian Bureau of Statistics.
  • Link to fund pages: GROW

Please note that this interview was filmed on 12 March 2024.

Timestamps

0:00 - Intro
0:20 - Diversification and downside protection
1:33 - Why the ETMF structure
1:57 - An objective-based approach
3:33 - How is GROW currently invested and why?
4:21 - Two examples of current investments
5:28 - How investors can use GROW in a portfolio

Unlock potential to grow your wealth

By investing across a broad range of asset classes, GROW aims to achieve its return objectives with lower volatility of returns. Find out more by visiting the Schroders website or the fund profile below.

ETF
Schroder Real Return (Managed Fund) (GROW)
Australian Fixed Income
........
Livewire gives readers access to information and educational content provided by financial services professionals and companies ("Livewire Contributors"). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision, please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors. This information is issued by Schroder Investment Management Australia Limited (ABN 22 000 443 274, AFSL 226473) (Schroders). It is intended solely for wholesale clients (as defined under the Corporations Act 2001 (Cth)) and is not suitable for distribution to retail clients. This information does not contain and should not be taken as containing any financial product advice or financial product recommendations. This information does not take into consideration any recipient’s objectives, financial situation or needs. Before making any decision relating to a Schroders fund, you should obtain and read a copy of the product disclosure statement available at www.schroders.com.au or other relevant disclosure document for that fund and consider the appropriateness of the fund to your objectives, financial situation and needs. You should also refer to the target market determination for the fund at www.schroders.com.au. All investments carry risk, and the repayment of capital and performance in any of the funds named in this document are not guaranteed by Schroders or any company in the Schroders Group. The material contained in this document is not intended to provide, and should not be relied on for accounting, legal or tax advice. Schroders does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this document. To the maximum extent permitted by law, Schroders, every company in the Schroders plc group, and their respective directors, officers, employees, consultants and agents exclude all liability (however arising) for any direct or indirect loss or damage that may be suffered by the recipient or any other person in connection with this document. Opinions, estimates and projections contained in this document reflect the opinions of the authors as at the date of this document and are subject to change without notice. “Forward-looking” information, such as forecasts or projections, are not guarantees of any future performance and there is no assurance that any forecast or projection will be realised. Past performance is not a reliable indicator of future performance. All references to securities, sectors, regions and/or countries are made for illustrative purposes only and are not to be construed as recommendations to buy, sell or hold. Telephone calls and other electronic communications with Schroders representatives may be recorded.

2 topics

1 stock mentioned

1 fund mentioned

1 contributor mentioned

Chris Conway
Managing Editor
Livewire Markets

My passion is equity research, portfolio construction, and investment education. There are some powerful processes that can help all investors identify great opportunities and outperform the market, and I want to bring them to life and share them...

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.

Comments

Sign In or Join Free to comment