An alternative to index chasing for objective-based investors
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;
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.
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.
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.
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