Schroders has picked up more than $400 million from NZ investors less than a year after launching portfolio investment entity (PIE) versions of its flagship global equities fund.
The Schroders Sustainable Global Core strategy reported about $425 million in total across the hedged and unhedged PIE vehicles as at the end of August.
On tour in NZ earlier this month, Simon Mead, Schroders Australia institutional client manager, said the fund had hit a nerve with advisers and investors looking for low-cost alternatives to pure passive exposures.
Mead said the flows were mostly new money rather than converts from Australian unit trust varieties of the same long-running international shares strategy.
For example, investment consultancy firm, MyFiduciary, has added the Schroders PIEs to its model portfolios, which are used by a wide range of advisory firms such as the Milestone Group.
Chris Douglas, MyFiduciary principal, said the funds offered low-cost exposure to a core global equities portfolio with some additional off-index active risk.
“We’ve reduced Vanguard and some Dimensional weightings in the models [to make way for Schroders],” Douglas said.
The fund is also part of a couple of NZ institutional multi-manager panels including Mercer and Westpac/BT.
Schroders QEP co-head of research, Paul Taylor, told NZ investors and advisers in a series of presentations across the country in September that the strategy is designed as a “sleep well at night portfolio”.
Taylor said the style tends to multiple “small active bets” against the benchmark MSCI World (ex Tobacco) Index.
“Our tracking error is about 1.5 per cent,” he said.
However, the global Schroders QEP process starts from a total universe of about 15,000 stocks that is quickly winnowed down after applying quality, value and environmental, social and governance (ESG) screens.
The reference index holds some 1,600 stocks while the current Core Fund invests in about 450 companies.
“Value and quality are the key drivers of returns over the long term,” Taylor said.
Since inception in January 2000, the Schroders strategy has outperformed in 19 out of 24 calendar years and over 80 per cent of three-year rolling periods, he said, delivering net annualised ‘alpha’ of 0.5 per cent above the index.
Total annual fund costs land at 0.39 per cent.
Established in October last year, the Schroders PIE funds are hosted by FundRock NZ with Trustees Executors as supervisor and custodian (using JP Morgan for sub-custody) and Apex for administration.
Heathcote Investment Partners represents Schroders in NZ.
The UK-founded Schroders has a long history dating back to 1800, opening its Australian office in 1964.
Globally, the Schroders QEP arm manages about $44 billion with almost 60 per cent invested in the core international share funds.
In NZ, the firm – which previously served as the underlying manager for the AMP Capital multi-asset funds – also runs over $1 billion in institutional mandates.