Schroders Asia range to fill emerging market void
The group's Asian Alpha Plus, Asian Income and Asian Income Maximiser funds are all sector leaders, and have attracted vast inflows as a result.
By Joshua Ausden, News Editor, FE Trustnet
Wednesday July 04, 2012
The big gap left by the soft-closure of Aberdeen Emerging Markets
and five First State funds has unearthed a major opportunity in the emerging market sector, according to Robin Stoakley, managing director of intermediary business at Schroders.
With many commentators predicting the imminent soft-closure of the highly rated First State Global Emerging Markets Leaders
and Asia Pacific Leaders
portfolios, Stoakley thinks there is a gap that needs to be filled.
"In Newton, Aberdeen and First State, you have three vast franchises that have attracted a huge amount of money," he said.
"Emerging market funds can’t run the sort of money that those in the UK and US can, which is why you see so many soft close so early. We’re a big beneficiary of this and already we’re seeing more of an uptake in our funds."
"We see it as a big opportunity and are donating a lot of our time and resources to increase our profile in the area."
Schroders currently runs eight emerging market portfolios in the IMA unit trust and OEIC universe. The Schroder Global Emerging Market fund is itself a relatively middle-of-the-road fund, marginally underperforming its MSCI Emerging Market benchmark over three, five and 10 years.
However, Stoakley points to the strong performance of Schroders Asia funds.
"In Asian Alpha Plus
, Asian Income
and Asian Income Maximiser
, we have three funds that have received significant inflows for three reasons," he said.
"First of all, they’re all strong performers and have beaten their benchmark significantly."
"Secondly, advisers are now brave enough to look to emerging markets for their risk exposure, thanks to their strong run in the last few years."
"And lastly, because there is simply a shortage of good funds out there due to all the soft-closures we’ve seen."
Performance of funds vs indices over 5-yrs
Source: FE Analytics
According to FE data, all three have vastly outperformed their sector average and benchmark since launch.
Both Schroder Asian Income and Alpha Plus are FE five crown-rated, but Schroder Asian Income Maximiser does not yet qualify for the accolade since it doesn’t yet have a three-year track record.
The £198m Schroder Asian Income fund – the longest-standing of the three – has returned 85.32 per cent since its launch in December 2006, outperforming its sector average and MSCI Asia Pacific ex Japan benchmark by 27 and 25.96 per cent respectively.
Performance of fund
vs index and benchmark
Source: FE Analytics
It is also consistently more stable, lost less during the 2008 downturn and, with a one-year historic yield of 4.55 per cent, it is one of the highest dividend payers.
Schroder Asian Income Maximiser, which is also headed up by manager Richard Sennitt, is one of the few that is yielding more (7.06 per cent).
Matthew Dobbs’ Schroder Asian Alpha Plus fund is a top-10 performer in its sector since its launch in November 2007, with returns of 46.4 per cent.
It managed to outperform during the up markets of 2009 and 2010, as well as the downturn in 2011.
The FE five crown-rated Schroder ISF Asian Total Return fund, which is domiciled in Luxembourg, is another consistently strong performer, and it is a similar story with the group’s Emerging Europe offering.
Stoakley also points to the strength of Schroders’ emerging market debt range, as well as Dobbs’ Schroder Small Cap Discovery fund, which was launched earlier this year.
"Although it’s officially a global fund, this has a big bias to Asian emerging markets," he said.
"Its global tag means that it can hold companies in Hong Kong and Singapore, which derive most of their profits from emerging markets."
"The fund has only just been launched, but we’ve seen a lot of interest in it and have high hopes."
Advisory firm Bestinvest has already announced that it is paying close attention to the fund’s progress.
"Smaller companies in emerging economies offer a higher degree of exposure to local markets than their larger counterparts as well as higher growth prospects, but this comes at the expense of greater volatility," the firm said in a recent note to investors.
"They are also less researched than larger companies, creating more opportunities for active fund managers to add value. Manager Dobbs has been with Schroders for over 30 years and has an outstanding track record investing in Asia, so this fund is clearly one to watch."