Patrick Brenner, Schroders
The Schroder Global Multi-Asset Thematic Fund was launched on Friday, and invests in growth sectors across the world, with a multi-asset portfolio to manage risk and generate income.
“The strategy is different to others by being both multi-themed and multi-asset,” Patrick Brenner, head of multi-asset investments, Schroders, told FSA.
The fund is domiciled Hong Kong in order to help capture investors in the Greater Bay Area as the economic bloc becomes more integrated, and to tap into demand through the evolving wealth connect scheme linking mainland China and Hong Kong.
It is managed by Brenner and Schroders’ deputy head of multi-asset investments in Asia, Keiko Kondo.
Three themes
There are three core themes identified by Brenner that shape portfolio construction: innovative transformation, cities and lifestyle, and environment and sustainability.
First, “innovative technologies and social changes are reshaping the way we live, and have introduced immense investment opportunities to investors,” he said.
He highlighted e-commerce as an example, noting that online sales volume has increased by over 20% for five consecutive years in China, and that the widespread adoption of 5G will expedite the development of the Internet of Things, creating a new ecosystem and providing growth momentum to multiple sectors.
“For some companies, such disruptive changes have resulted in exceptional growth in revenue and profitability, hence attracting more investors’ attention,” he said.
Second, “ordering food and groceries online have become the habit of many households, and the increase in sales volume has boosted demand across various sectors along the entire supply chain, such as payments, warehousing, logistics and transportation,” said Brenner.
Finally, “after the “Paris Agreement” was adopted at the 2015 United Nations Climate Change Conference, countries across the world have introduced measures for reducing greenhouse gas emission”, which is boosting industries such as electric vehicles.
A with all Schroders funds, “ESG is integrated into the investment process, and it is one of the fund’s three themes, but it is not an ESG fund”, said Brenner.
Investment process
Portfolio allocation is determined by bottom-up analysis using the firm’s global equity and fixed income teams to generate alpha. There is no benchmark, but the MSCI ACWI and Barclays Bloomberg Global Aggregate are used as reference gauges.
The portfolio comprises 50% equities, 40% bonds, 5% commodities, 5% cash. The equity sleeve is made up of 40% city and lifestyle stocks, 20% environment stocks, and 20% innovation stocks; 60% is allocated to the US, 6% to Japan, 5% to South Korea and Taiwan, 4% to China and 3% to the UK.
“There is growth tilt, but style is tempered by the business and economic cycles,” said Brenner, “and the fund will manage the market’s current preference for value sectors, through complementary tactical trades, such as allocations to finnacials.”
“However, by its nature, the strategy’s DNA is growth-oriented, and it will never have a value tilt,” he said.
The fixed income sleeve is composed of government bonds and investment grade credit for “portfolio stability, but in future it will target thematic credit,” said Brenner.
