March 2015
Schroder
Global Multi-Asset Income Fund
Picture your
perfect retirement
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Contents
2
3
Freedom to choose
4
Making choices for income
6
Introduction to the Schroder Global
Multi-Asset Income Fund
7
What are the risks?
8
Could the Schroder Global Multi Asset
Income Fund be right for you?
9
Our investment strategy to achieve
the fund’s objectives
10
Multi-discipline expertise
10
How to invest
11
Jargon Buster
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Freedom
to choose
In its March 2014 Budget, the UK Government announced that from April 2015, anyone aged 55
or above would be able to take their defined contribution pension pot however they want, subject
to their marginal rate of income tax in that year.
Previously many people with defined contribution savings were effectively compelled to purchase
an annuity.
This change means that anyone with an accumulated pension pot has much greater flexibility and
control over making financial plans for their retirement.
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Making choices
for income
Low interest rates resulting from a sluggish global economy have reduced the level of reliable
income available from many traditional sources. In this context it is essential to make an informed
decision about how to best use the money you have built up over your lifetime to provide an income
for retirement.
There are two main options for generating an income from your pension pot:
Buy an annuity
Buying an annuity will provide you with a guaranteed regular income for life in
exchange for the money in your pension pot.
Since annuity providers typically invest this money in long-term government bonds,
the level of income provided will depend on the interest rate on bonds issued by
the government at the time you purchase the annuity.
Different types of annuity are available. Additional features include inflation
indexation (which provides protection against the rising cost of living by linking the
value of the annuity income to inflation) and joint-life, where a spouse or financial
dependant receives an income after the death of the annuity holder. Annuities with
these features provide a lower level of initial income than standard single-life annuities.
You may be eligible for an annuity paying an enhanced level of income if your
lifestyle or health are likely to reduce your life expectancy.
Purchasing an annuity is a one-off, irreversible decision, but you can do so at any
stage during retirement. If you purchase an annuity at a later age, you may receive
a higher level of income.
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Take a ‘drawdown’ income from savings or investments
Unlike annuities, savings accounts and investment products are not usually designed
specifically to provide retirement income and do not guarantee income for life.
However, they may offer:
–– The potential for a higher level of regular income than you would receive from
an annuity
–– The potential for growth in income to help counteract the rising cost of living
–– The potential to maintain or grow capital during retirement, where the capital is
not taken and used as income
–– The freedom to change to an alternative product at any stage to reflect
changes in your income needs, including the option of buying an annuity.
When considering a savings or investment product to provide retirement income you
should pay close attention to potential risks. Continuing exposure to investment risk
during your retirement will be one such consideration; as will any taking of funds from
your capital to provide income where there is a possibility that you could run out of
funds before the end of your life.
Seeking advice
Purchasing an annuity and using savings and investments to supplement your retirement income are
not mutually exclusive - your financial adviser should be able to help you select the best options for
your individual requirements.
An adviser will take into account a range of factors, including the size of your pension pot, other
sources of income, your risk tolerance, expected outgoings through retirement and whether the
potential to provide a legacy from your pension pot is important to you.
If you do not currently have a financial adviser, one option is to search for a local, independent adviser
at www.unbiased.com. You may also find it useful to visit www.vouchedfor.co.uk, where members
of the public rate and review advisers they have used.
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Introduction to the
Schroder Global Multi-Asset Income Fund
The new Schroder Global Multi-Asset Income Fund has been designed with the needs of the newly
empowered generation approaching retirement in mind.
It is an actively managed fund that invests across a wide range of asset classes aiming to provide
an attractive, sustainable income stream from a well diversified portfolio.
The fund has been modelled on an existing fund aimed primarily at overseas investors that was
launched in April 2012. The investment approach was developed by our highly experienced
Multi-Asset team, which manages more than £4 billion in global multi-asset income strategies.
The fund has the potential to enhance your retirement financial planning by providing:
–– A reliable annual income in the range of 4-6% with a target of 5%, which can be paid monthly
or left to accumulate within the fund and then withdrawn
–– The potential to grow your capital over the long term by targeting a combined annual return of
7%, including growth as well as income, over a market cycle
These target figures will be reviewed on an ongoing basis to ensure that market conditions continue
to make them achievable. Please note that they are not guaranteed.
You can withdraw part or all of your money at any time without charge, however please bear in mind
that the fund is designed as a medium-to long-term investment.
The risk rating for the fund, which is published in the Key Investor Information Document (KIID), is ‘4’ on
a scale of 1-7. The fund is in this category because it can take higher risks in search of higher rewards
and its value may rise and fall accordingly. The fund’s risk category is not guaranteed to remain fixed and
may change over time.
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What are the risks?
–– The value of investments and the income from them may go down as well as up and you may not
get back the amount you originally invested
–– Part of the fund is invested in bonds. The government or company issuer of a bond might not
be able to repay either the interest or the original loan amount and therefore default on the debt.
This would affect the credit rating of the bond and, in turn, the value of the fund. Investment in bonds
and other debt instruments (including related derivatives) is subject to interest rate risk. The value of
the fund may go down if interest rates rise and vice versa
–– The fund may invest in higher-yielding, or non-investment grade, bonds. The risk of the issuer
defaulting on the capital repayment is higher than with investment grade bonds
–– The fund may also invest in emerging markets equities and this can involve a higher degree of risk
–– The fund holds investments denominated in currencies other than sterling and changes in exchange
rates will cause the value of these investments (and the income from them) to rise or fall
–– The fund can use derivatives for investment purposes. These instruments can be more volatile than
equities or bonds
–– Income and capital growth targets are an estimate and not guaranteed
–– If the fund’s income is not enough to cover the regular income payments, they may be sourced from
your capital. The value of your capital can therefore be eroded and you may not get back the amount
you invested
–– As a result of all fees being charged to capital, the distributable income of the fund may be higher
but there is the possibility that performance or capital value may be eroded.
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Could the
Schroder Multi-Asset Income Fund
be right for you?
You should carefully consider whether the objectives of the fund and the risks of investment
are aligned with:
–– Your personal investment objectives, including income needs
–– The length of time you are prepared to leave your money in the fund
–– Your attitude to risk.
Costs
£ 0.82%*
Ongoing variable management charge
*The ongoing charge covers the costs of running the fund, including marketing and
distribution expenses and may vary year-to-year. 0.82% is a simulated figure based on
the expenses of the offshore version of the fund, Schroder International Selection Fund
(ISF) Global Multi-Asset Income for the year ending June 2014. This charge reduces the
potential growth of your investment.
The fund may be suitable for investors who are…
✔
–– Nearing or in retirement and seeking to generate retirement income
–– Aiming for income and capital growth and willing to invest in a fund classified as
above low-risk
–– Willing to accept possible short-term losses for the benefit of potential long-term gains
–– Looking for diversity in their investment portfolios
–– Comfortable with the risks associated with an equity-based investment
–– Have a medium to long-term investment horizon of 3-5 years plus
The fund may not be suitable for investors who are…
✖
TAXForm
––
––
––
––
––
Seeking a low risk fund
Not prepared to have their capital at risk
Uncomfortable with the level of risk associated with equity-based investment
Uncomfortable with the risks associated with the use of derivatives
Have a short-term investment horizon
Tax considerations
Whilst we do not make income tax deductions at source, the payments you receive from
Schroder Global Multi-Asset Income will be subject to income tax. The amount you pay
will depend upon whether you are a basic rate or higher rate taxpayer.
If you withdraw your investment, you may be liable to capital gains tax.
Any income that is reinvested into the fund will be taxed as dividend income and we will
provide you with a tax voucher
Your financial adviser should be able to discuss whether the fund could be a suitable investment
for you based on a detailed assessment of your individual circumstances.
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Our investment strategy
to achieve the fund’s objectives
We aim to deliver an attractive, sustainable income stream while preserving or growing your capital
by investing in a diversified selection of high quality, income-generating assets.
By taking a global approach, we can access the widest possible set of opportunities. This allows
us to invest wherever the most attractive income generating assets can be found across markets
in North and South America, Europe, Asia Pacific and Africa.
Investing across a range of different asset classes gives us the flexibility to position the fund in areas
with the greatest potential for generating income and growth at any time. The fund can invest in equities
and bonds as well as what are known as alternative asset classes, which include property, infrastructure
and municipal bonds (bonds issued by local authorities).The fund aims to hold liquid, listed investments
which can be easily sold if required.
The fund is not driven by a benchmark index. This allows us to reduce unwanted sources of risk and to
focus on identifying value wherever it is located.
Schroders’ Multi-Asset team provides the framework for the fund and determines allocations to the
asset classes. The underlying equity and bond portfolios are managed by teams with specialist expertise
in these asset classes.
Asset allocation ranges
Equities
10-40%
The fund’s equity allocation is highly
diversified, typically containing more
than 200 stocks. We select stocks
based on quality and value with the
objective of pinpointing investments
that have the potential to deliver
consistent dividends on a consistent basis.
£
Cash
0-20%
Bonds
60+%
The fund’s bond allocation is highly
diversified, accessing attractive income
opportunities across corporate and
government bonds in both developed and
emerging markets. We consider global
investment trends, weigh up risks and
opportunities at a market and country level
and carefully analyse individual bonds.
Alternative asset classes
0-10%
Investment in alternative assets (such as
commodities or private equity) provides
a diversified source of additional income
and can also reduce the overall portfolio
risk through their lower correlation to
traditional equities and bonds. Up to 10%
of the fund can be invested in alternative
asset classes.
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Multi-discipline
expertise
The fund is managed by Aymeric Forest and Iain Cunningham.
Aymeric Forest – Lead Fund Manager
Aymeric Forest is lead fund manager and Head of Multi Asset Investments
– Europe and has 18 years of investment experience. He joined Schroders
in 2011 as a fund manager within Multi Asset. He is the lead manager of the
Luxembourg registered Schroder ISF Global Multi-Asset Income, a member
of Schroders’ Global Asset Allocation Committee and Volatility Risk Premia
group leader.
Iain Cunningham – Co-Fund Manager
Iain Cunningham is co-fund manager and is responsible for the management
of a number of multi-asset mandates that are principally focused on income
and dynamic asset allocation. He joined Schroders in 2007 as a graduate
trainee and specialises in currency and commodity research and is a
member of Schroders’ Strategic Investment Group Multi-Asset (SIGMA).
Aymeric and Iain are supported by a team of global income specialists who in turn benefit from the
input of more than 200 investment professionals with specialist expertise in different areas and asset
classes. The team meets frequently to identify opportunities and risks, discuss investment themes
and analyse the positioning of the fund.
How to
invest?
The Schroder Global Multi-Asset Income Fund is available to buy through a variety of fund
supermarkets and investment platforms, but we believe it is important you obtain appropriate advice
before investing. A financial adviser will work with you to determine your investment objectives and the
level of risk you are comfortable taking with your money. You can find financial advisers at
www.schroders.co.uk/unbiased or www.vouchedfor.co.uk.
Please note that the Fund cannot be purchased directly through Schroders.
*International Selection Fund.
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Jargon buster
Active management
Derivative
An investment management approach where
a manager aims to beat the market through
research, analysis and their own judgement.
A contract between two or more parties whose
value is based on an agreed-upon underlying
financial asset, index or security, such as a
commodity, interest rate or market index.
Annuity
A contract sold by an insurance company
designed to provide guaranteed payments to the holder at specified intervals, usually after retirement.
Diversification
Asset class
Emerging markets
A broad group of investments with similar
characteristics. The main investment asset
classes are equities, bonds and cash.
Non-traditional asset classes such as
property and commodities are known as
alternative investments.
Countries that have rapidly growing economies
and may be going through the process of
industrialisation.
Benchmark index
A predetermined set of securities (see below)
with similar characteristics, such as the FTSE
All-Share Index for UK equities.
Bond
Investing across a range of different asset types
to reduce the risk of loss through exposure to
an individual asset.
High yield bond
A bond which pays a higher level of coupon
than an ‘investment grade’ bond but has a lower
credit rating, indicating a higher risk of default.
Interest rate risk
The risk that an investment’s value will change
due to a change in interest rates
A security issued by a government, company
or municipal authority in the form of an IOU,
typically with an agreement to make fixed interest
payments at specified intervals until a set date,
known as the maturity date, when the original
capital sum is repaid.
Market cycle
Credit rating
A rating attached to bonds that carry a higher
risk of the issuing company being unable to repay
the issued debt than investment grade bonds,
where the company that issues the bond is rated
as being able to meet its payment obligations.
A forward-looking indication of the credit
worthiness of a bond issuer. Credit ratings
agencies assess the ability and willingness of
bond issuers to meet their financial obligations
in full and on time.
Debt instrument
A tradable stock, bond or option linked to a loan
and repayment agreement.
Default
Where a company or government is unable to
meet fixed interest payments on a bond or repay
capital in full on the maturity date.
The period during which a market rises, peaks,
falls and bottoms-out, which can be less than
24 hours in the case of a day trader or many
years for a property investor.
Non-investment grade
Securities
Financial instruments that represent either
an ownership position in a publicly-traded
corporation (stock), a creditor relationship with
a governmental body or a corporation (bond) or
rights to ownership in the form of an option.
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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 £300 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 3500 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 go to
www.schroders.co.uk/investor
or speak to your financial adviser.
Source: Schroders, all data as at 31 December 2014.
Important information: Past performance is not a reliable indicator of future performance. The value of investments can go down as well as up and you may not get back the
amount originally invested. Schroders has expressed its own views and these may change. The data contained in this document has been sourced by Schroders and should
be independently verified before further publication or use. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment
recommendations Issued in March 2015 by Schroder Unit Trusts Limited, 31 Gresham Street, London, EC2V 7QA. Registered no. 4191730 England. Authorised and regulated
by the Financial Conduct Authority. UK09061 w46818