Global wealth manager Schroders has introduced an actively managed high-yield credit fund aimed at investors looking to diversify away from equities and term deposits.
The Schroder Australian High Yielding Credit Fund targets returns of 2.5 to 3.0 per cent above the cash rate over the medium term and offers daily liquidity. The fund invests in a range of Australian credit securities, including both senior and subordinated debt, as well as rated and unrated credit.
Although the fund has been a part of Schroders’ broader fixed income and multi-asset strategies since 2001, it is now being offered directly to individual investors for the first time as a standalone product.
Schroders fixed income manager Helen Mason explained the fund aims to capitalise on higher yields driven by current market conditions and elevated interest rates and can serve as a tool for portfolio diversification.
“Following years of rates at near zero, yields have been restored and fixed income assets are back in play. Inflation remains sticky while growth and employment are holding up, forcing central banks to maintain rates at elevated levels,” Mason noted.
“The fund incorporates top-down and bottom-up views to identify the most compelling assets to own at any given point in the cycle and aims to provide attractive income opportunities, offering daily liquidity while effectively managing default risk.
“It has the flexibility to invest across the Australian credit universe, unconstrained by benchmarks, to capture returns with appropriately managed risk.
“The targeted result of this strategy is a diversified portfolio of investment-grade rated credit securities with the potential to deliver consistent returns above cash and term deposits but with lower volatility than equities.”
The portfolio has delivered a strong 11.01 per cent return over the past year, outperforming the cash rate by 6.70 per cent, and has consistently outperformed in the long term, with returns of 2.80 per cent and 2.79 per cent over the past five and 10 years, respectively.
The offering has received a recommended rating from Zenith Investment Partners and is now available to retail investors with a minimum investment of $20,000, with applications made directly through Schroders.
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