A guide to
multi-manager investing
M U L T I - M A N A G E R
I N V E S T I N G
What is
multi-manager investing?
Multi-manager funds invest in a selection of
individual funds to form a complete portfolio in
one package. They’re designed to take the worry
out of deciding how and where to invest as the
manager picks a range of funds in different regions
and asset types to suit that particular climate.
Diversifying your investments Multi manager funds
access a wide range
of investments,
including equities,
bonds and property
iversification is based on the idea that ‘you shouldn’t put all your eggs in one
D
basket’. Different types of investments will move differently at different times
of an economic cycle and some will be riskier than others. The idea is that
diversifying your investment portfolio can help spread some of the risk across
a number of ‘baskets’ – so when one investment falls, the other investments
should stay intact. Diversification cannot guarantee investment returns or remove
the possibility of loss, but it is a widely-used tool that could be used to help
manage risk.
What is the ‘Diversity’ range?
The Diversity range at Schroders has been created to fit with a range of
investment goals and risk profiles. As the name implies, the range invests in a
number of hand-picked funds selected from across the entire market. Each fund
has a different target and aims to deliver returns with less volatility than other
funds in the market, although this is not guaranteed.
What are the risks?
All investments contain some element of risk and no investment can be said to
be ‘risk free’ – you need be aware of the potential risks and rewards before you
invest. Always bear in mind that the value of investments can go down as well
as up and you may not get back the amount you originally invest.
A financial adviser can help you determine your attitude to risk by going through
a risk questionnaire. From there, you can start to form a portfolio of investments
that you’re comfortable with. For a more detailed explanation of the risks
associated with investing in individual funds, please see pages 4-5, or refer to
the funds’ Key Investor Information Documents (KIIDs) and Prospectuses.
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M U L T I - M A N A G E R
I N V E S T I N G
Achieving the right mix
Different asset classes will perform differently as the market
changes — today’s winner may be tomorrow’s loser.
The table below shows the performance of individual asset
classes over the last decade. To take one of the most
volatile examples, commodities offered a gain of 56% in
one year (2005) and a loss of -12% the next.
Best
A skilled multi-manager will monitor the external
environment and adapt the portfolio to suit. They hope
to achieve the optimal mix of assets for the economic
environment, all at the right level of risk. 2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Commodities
56%
Small Cap
23%
Emerging Markets
41%
Gilts
13%
High Yield
92%
Emerging Markets
27%
Index-Linked
20%
Small Cap
36%
Small Cap
44%
US Equities
20%
Emerging Markets
52%
Emerging Markets
21%
Commodities
38%
Cash
5%
Emerging Markets
61%
Asia ex-Japan
24%
Gilts
16%
High Yield
35%
US Equities
30%
Property
19%
Japan Equities
42%
Europe ex-UK
20%
Asia ex-Japan
29%
Index-Linked
4%
Small Cap
58%
Commodities
24%
Property
8%
Europe ex-UK
18%
Europe ex-UK
25%
Index-Linked
19%
Asia ex-Japan
25%
Property
18%
Europe ex-UK
16%
Japan Equities
2%
Asia ex-Japan
54%
Japan Equities
19%
Corporates
7%
Asia ex-Japan
18%
Japan Equities
25%
Gilts
14%
World ex-UK
25%
UK Equities
17%
Hedge
10%
Corporates
-4%
Commodities
34%
US Equities
19%
US Equities
3%
Corporates
13%
World ex-UK
23%
Corporates
12%
Europe ex-UK
24%
Asia ex-Japan
13%
World ex-UK
4%
US Equities
-13%
UK Equities
30%
High Yield
18%
Commodities
3%
Emerging Markets
13%
UK Equities
21%
World ex-UK
12%
UK Equities
22%
Hedge
12%
Index-Linked
8%
World ex-UK
-17%
Europe ex-UK
20%
Small Cap
17%
Cash
1%
UK Equities
12%
High Yield
11%
High Yield
6%
Small Cap
19%
High Yield
11%
Cash
6%
Hedge
-19%
Hedge
20%
World ex-UK
17%
High Yield
-2%
World ex-UK
12%
Hedge
10%
Asia ex-Japan
5%
Property
19%
World ex-UK
6%
UK Equities
5%
Commodities
-21%
World ex-UK
19%
Property
15%
UK Equities
-3%
US Equities
11%
Property
6%
Emerging Markets
4%
US Equities
17%
Cash
5%
Gilts
5%
Property
-22%
US Equities
13%
UK Equities
15%
Hedge
-5%
Hedge
5%
Asia ex-Japan
3%
Hedge
3%
Hedge
11%
Index-Linked
3%
US Equities
4%
High Yield
-24%
Corporates
11%
Hedge
10%
World ex-UK
-6%
Gilts
3%
Corporates
1%
Japan Equities
3%
Index-Linked
9%
US Equities
2%
Corporates
2%
Europe ex-UK
-24%
Index-Linked
6%
Index-Linked
9%
Japan Equities
-10%
Japan Equities
2%
Index-Linked
1%
UK Equities
1%
Corporates
9%
Corporates
1%
High Yield
0%
UK Equities
-30%
Property
3%
Corporates
8%
Asia ex-Japan
-13%
Property
2%
Cash
0%
Cash
1%
Gilts
8%
Gilts
1%
Property
-4%
Asia ex-Japan
-31%
Cash
1%
Gilts
7%
Europe ex-UK
-15%
Index-Linked
1%
Gilts
-4%
Europe ex-UK
0%
High Yield
7%
Japan Equities
-11%
Japan Equities
-6%
Emerging Markets
-37%
Gilts
-1%
Europe ex-UK
6%
Small Cap
-15%
Cash
1%
Commodities
-4%
Small Cap
-3%
Cash
5%
Commodities
-12%
Small Cap
-18%
Small Cap
-48%
Japan Equities
-6%
Cash
1%
Emerging Markets
-19%
Commodities
-4%
Emerging Markets
-5%
Commodities
-29%
Worst
Source: Datastream, as at 31 December 2014. Returns in GBP. Property to Q3 2014.
Past performance is not a guide to future performance and may not be repeated. The value of investments and
the income from them may go down as well as up and investors may not get back the amount originally invested.
The sectors mentioned are for illustrative purposes only and not a recommendation to buy or sell shares.
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M U L T I - M A N A G E R
I N V E S T I N G
Higher risk
Higher potential reward
Lower risk
Lower potential reward
1–3
About the fund
4
5
Schroder MM Diversity
Income Fund
Schroder MM Diversity Fund
The asset class
breakdown is...
33.3%
Equities
The asset class
breakdown is...
33.3%
Neutral
position
Schroder MM Diversity
Balanced Fund
40%
65%
Equities
40%
Neutral
position
Fixed income
& cash
Fixed income
& cash
6-7
Equities
10%
Neutral
position
Fixed income
& cash
33.3%
20%
25%
Alternatives
Alternatives
Alternatives
The fund and manager have
been awarded...
A
AA
A
The types of investments the
manager can choose from
are…
UK and overseas shares, government
and corporate bonds, other fixed interest
securities and alternative investments
UK and overseas shares, government
and corporate bonds, other fixed interest
securities and alternative investments
Shares, government and corporate bonds
and cash, both in the UK and in overseas
markets. The fund invests at least 50% in
funds that buy shares
The fund...
Aims to deliver a consistent long-term
capital growth in excess of inflation
with lower risk than more traditional
approaches to investment management
Aims to provide an income whilst
preserving capital, in line or above
inflation, from a portfolio invested across a
wide range of asset classes
Aims to achieve a moderate income
with smooth and consistent returns in all
market conditions
Although not guaranteed,
the fund targets…
4% p.a. over inflation (as measured by the
Consumer Price Index) over the medium
term
Growth in its unit price in line with, or
above, the UK Consumer Price Index while
also making an average income payment
of 4% per annum
Outperformance of its benchmark –
a composite that represents different
benchmarks of stocks and shares, bonds
and alternative investments
The fund is measured
against…
The Consumer Price Index (CPI) –
a measure of inflation
The Consumer Price Index (CPI) –
a measure of inflation
A composite benchmark of the following
indices and weights: FTSE All Share index
(50%), FTSE All World ex UK (15%), FTSE
UK Govt All Stocks (10%), HFRI (10%), IPD
(10%) and GSCI (5%)
Performance
Q2 2014– Q2 2015
Q2 2013 – Q2 2014
Q2 2012 – Q2 2013
Q2 2011– Q2 2012
Q2 2010 – Q2 2011
Risks
The fund was launched on…
2.8%
-0.1%
6.4%
1.9%
3.5%
1.9%
Available for ISA
4 Minimum investment
Minimum monthly savings
Fund
2.9%
3.0%
2.4%
3.5%
2.4%
Benchmark
7.2%
9.4%
13.9%
13.6%
2.9%
21.7%
13.0%
6.9%
4.2%
Please note that performance targets are not guaranteed. Past performance is not a guide to future performance. The value of
investments and the income from them can go down as well as up and an investor may not get back the amount originally invested and
may be affected by fluctuations in exchange rates. You should also be aware of the other risks you take when investing. For example,
some of our multi manager funds have exposure to overseas markets, which means that currency fluctuations may adversely affect
the value of the funds’ investments and the income they provide. Some of the funds also invest partly in emerging markets which can
involve a higher than average risk than only investing in developed markets. The fund will invest mainly in collective investment schemes
which themselves may invest in bonds, equities and alternative investments each of which will have specific risks as detailed in the full
Prospectus. Details of the terms and further risk warnings are contained in the Prospectus and Key Investor Information Document.
Derivative instruments may be used in the fund for the purposes of efficient portfolio management only. This should not lead to an
increase in the risk to the fund. The managers will employ a risk management process to manage any derivative exposure achieved
for the purposes of efficient portfolio management. The levels and bases of tax assumptions may change. Source for performance:
FE Analytics, bid to bid with net income reinvested to 30 June 2015, A share class, net of fees in GBP.
1 September 2005
Entry charge
Ongoing charge (the amount
you’ll pay over a year related to
the costs of running the fund)
4.7%
5.3%
1.4%
-0.1%
15 December 2010
2 April 2012
0.00%
1.72% (A units)
1.22% (Z units)
1.71% (A units)
1.29% (Z units)
Yes
£1,000
£500
1.82% (A units)
1.32% (Z units)
M U L T I - M A N A G E R
I N V E S T I N G
Lower risk
Lower potential reward
Higher risk
Higher potential reward
1–4
5
6
Schroder MM Diversity
Tactical Fund
7
Schroder MM UK Growth Fund
Schroder MM International Fund
80%
The asset class
breakdown is...
Equities
5%
Neutral
position
100%
Neutral
position
Fixed income
& cash
100%
Neutral
position
Equities
Equities
15%
Alternatives
The fund and manager have
been awarded...
A
The types of investments the
manager can choose from
are…
A diverse range of asset types in global
markets, including shares, bonds, fixed
interest, cash and any other permitted
assets deemed appropriate to meet the
investment objective
Funds invested predominantly in UK shares
across all economic sectors
Funds invested in any and all geographic
areas of the world
The fund
Aims to provide capital growth in its unit
price mainly through investment in global
markets
Aims to provide capital growth through
investment in a diversified portfolio of
UK shares
Aims to provide capital growth through
investment in global share markets and
in all economic sectors. The fund has
no geographic or sector limits
Although not guaranteed,
the fund targets…
Outperformance of its benchmark –
a composite that represents different
benchmarks of stocks and shares, bonds
and alternative investments
Outperformance of its benchmark, the
FTSE All Share index
Outperformance of its benchmark,
the FTSE All World (ex UK) index over
the medium term
The fund is measured
against…
A composite benchmark of the following
indices and weights: FTSE All Share
index (50%), FTSE All World ex UK (30%),
FTSE UK Govt All Stocks (5%),
HFRI (10%), IPD (5%)
The FTSE All Share index – an index
designed to represent the performance of
all eligible companies listed on the London
Stock Exchange’s main market
The FTSE World (ex UK) index – an index
designed to represent the performance of
international investments outside the UK
Performance
2.8%
2.6%
Q1 2014– Q1 2015
6.5%
7.2%
Q1 2013 – Q1 2014
6.1%
10.0%
Q1 2011– Q1 2012
Q1 2010 – Q1 2011
Risks
The fund was launched on…
13.1%
13.1%
-1.7%
9.5%
18.7%
Available for ISA
Minimum investment
Minimum monthly savings
30.7%
22.7%
17.9%
-2.6%
-3.1%
0.2%
-3.7%
-3.5%
18.8%
25.6%
14.3%
22.1%
Please note that performance targets are not guaranteed. Past performance is not a guide to future performance. The value of investments
and the income from them can go down as well as up and an investor may not get back the amount originally invested and may be affected
by fluctuations in exchange rates. You should also be aware of the other risks you take when investing. For example, some of our multi
manager funds have exposure to overseas markets, which means that currency fluctuations may adversely affect the value of the funds’
investments and the income they provide. Some of the funds also invest partly in emerging markets which can involve a higher than average
risk than only investing in developed markets. The fund will invest mainly in collective investment schemes which themselves may invest
in bonds, equities and alternative investments each of which will have specific risks as detailed in the full Prospectus. Details of the terms
and further risk warnings are contained in the Prospectus and Key Investor Information Document. Derivative instruments may be used
in the fund for the purposes of efficient portfolio management only. This should not lead to an increase in the risk to the fund. The
managers will employ a risk management process to manage any derivative exposure achieved for the purposes of efficient portfolio
management. The levels and bases of tax assumptions may change. Source for performance: FE Analytics, bid to bid with net income
reinvested to 30 June 2015, A share class, net of fees in GBP.
22 May 2002
Entry charge
Ongoing charge (the amount
you’ll pay over a year related to
the costs of running the fund)
9.3%
9.8%
26.7%
23.7%
16.4%
Q1 2012 – Q1 2013
9.9%
10.7%
22 May 2002
22 May 2002
0.00%
1.88% (A units)
1.38% (Z units)
1.86% (A units)
1.45% (Z units)
1.94% (A units)
1.44% (Z units)
Yes
£1,000
£500
5
M U L T I - M A N A G E R
I N V E S T I N G
Packaging your portfolio more efficiently
ulti-manager investing could be more cost efficient than if you were to buy
M
the same funds individually, and (depending on your tax position) you could
enjoy certain tax benefits, especially if you use a tax efficient wrapper such
as an ISA. Your financial adviser can go through your individual tax implications
with you.
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M U L T I - M A N A G E R
I N V E S T I N G
Why choose the Diversity team?
The Diversity team has a long-standing reputation within the investment
community and collectively bring over 57 years of investment experience.
They have been with Schroders since 2013, having joined as part of the
integration with Cazenove Capital Management.
Led by Marcus Brookes, the team actively manages the range to ensure
the right blend of funds is working to achieve investor goals.
The team pays close attention to what’s happening in the market. Their
starting point is always deciding on their view of the world: where it is
going, what different economic outcomes may emerge and what assets will
work in different scenarios. Only then do they move onto selecting funds.
Marcus Brookes
Head of Multi-Manager
Robin McDonald
Fund Manager
Joe Le Jehan
Fund Manager
How to invest
The Diversity range is available to buy through a number of fund
supermarkets and investment platforms but if you’re unsure, it’s important
to get the right advice before you invest.
Joe Tennant
Product Specialist
You can find a financial adviser www.unbiased.co.uk or
www.vouchedfor.co.uk
Find out more
For further information, including Key Investor Information Documents and
Prospectuses, visit www.schroders.co.uk/multimanager or phone Investor
Services on 0800 718 777 (for your security, calls will be recorded).
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M U L T I - M A N A G E R
I N V E S T I N G
Trusted heritage
Advanced thinking
At Schroders, asset management is our business and our
goals are completely aligned with those of our clients — the
creation of long-term value.
We manage £319.5 billion on behalf of institutional and retail
investors, financial institutions and high net worth clients
from around the world, invested in a broad range of asset
classes across equities, fixed income, multi-asset and
alternatives.
We employ over 3600 talented people worldwide operating
from 37 offices in 27 different countries across Europe, the
Americas, Asia and the Middle East, close to the markets in
which we invest and close to our clients.
Schroders has developed under stable ownership for over
200 years and long-term thinking governs our approach
to investing, building client relationships and growing our
business.
To find out more, visit
www.schroders.co.uk/investor
or speak to your financial adviser
Source: Schroders as at 31 March 2015
Important information: This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not
intended as an offer or solicitation for the purchase or sale of any financial instrument. Schroders has expressed its own views and opinions in this document and these
may change. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is
believed to be reliable but Schroder Investment Management Ltd (Schroders) does not warrant its completeness or accuracy. The data has been sourced by Schroders
and should be independently verified before further publication or use. No responsibility can be accepted for error of fact or opinion. Reliance should not be placed on the
views and information in the document when taking individual investment and/or strategic decisions. Source for performance: FE Analytics, bid to bid with net income
reinvested to 30 June 2015, A share class, net of fees in GBP. Source for ratings: Citywire, Defaqto, Rayner Spencer Mills, Morningstar, Morningstar OBSR, Trustnet,
Square Mile and FundCalibre as at 30 June 2015. The charges shown are for the ‘A’ accumulation’ and income share classes (where available): accumulation units are
units where any growth is reinvested into the fund, whereas income units are paid out as income. ‘A’ is the main unit share class available to retail investors. Additional
share classes are available and charges will vary according to the method by which you invest. Charges are correct as at 13 July 2015. Visit www.schroders.co.uk/investor
for more details. Issued in July 2015 by Schroder Unit Trusts Limited, 31 Gresham Street, London, EC2V 7QA. Registered no. 4191730 England. Authorised and regulated by
the Financial Conduct Authority. UK09596