Schroders launches a £ 4 billion Investment Solutions business

Alex Funk, who currently manages the Schroder Portfolio suite of multi-manager products, will become the new arm’s chief investment officer. He will work alongside Schroders’ £169.4bn multi-asset team led by Johanna Kyrklund, as well as alongside a dedicated team of investment analysts.

Schroder Investment Solutions will offer a range of model portfolios to investors spanning three ranges: Active, Strategic Index and Sustainable.

Active and Strategic Index will house nine model portfolios each with risk ratings between two and ten, while Sustainable will offer six risk-managed portfolios. Each product will have an annual management charge of 15 basis points.

Gillian Hepburn, intermediary solutions director at Schroders, said the launch follows an uptick in demand from advisers for outsourced multi-asset portfolios, both due to increasing regulatory pressures and a heightened desire from their clients to manage risk.

“Last year, when we conducted our adviser survey, we saw that 32% of advisers who outsource their investments in some way said that they would increase their allocation to multi-asset funds,” she told Investment Week.

“One of the things we are really pleased about is that we are bringing to market a full range of risk profiles within each individual segment – it is not just having the range of different solutions and styles, it is allowing advisers to have full control over risk levels.

“Last year, we did see a significant rebound in markets, but I think it gave investors a real wake-up call in terms of their capacity for loss.”

Pre-pandemic appetite

Doug Abbott, head of UK intermediary at Schroders, said an increased appetite for both multi-asset and sustainable investment solutions has been prevalent since before the pandemic.

While he believes 2020 has served to heighten demand for both areas of the market – and a combination of the two – he said the launch of Schroder Investment Solutions has been in the pipeline “for a couple of years”.

In terms of the new business’ Sustainable range of managed portfolios, Abbott explained it will utilise Schroders’ SustainEx tool, which measures the costs and benefits companies would face if their negative and positive externalities were priced in.

“We have the benefit of working really closely with the ESG team at Schroders; Alex Funk and his team are able to draw on a huge amount of proprietary tools that assess fund managers and investments on their sustainable credentials,” he said.

“We have our award-winning SustainEx tool which uses data from a whole variety of sources and assesses impact and risks at a granular level. But we also analyse funds on a monthly basis in a broader sense in terms of whether they are meeting our investment goals.

“We firstly use screening to monitor any exposure to alcohol, tobacco or fossil fuels, for example; then we look at ESG integration in terms of holdings’ contributions towards sustainable investing; then we factor in impact investing and SDGs [UN Sustainable Development Goals].”

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