Schroders' Maximiser fund range
A tested stockmarket based investment strategy targeting a 7%* annual yield
Schroders’ Maximiser strategy focuses on delivering a sustainable high level of income from a stock-market based investment.
Employing the skills of Schroders’ highly experienced Structured Investment Team and specialist equity investment teams, the Maximiser strategy has stood the test of time, delivering attractive income returns through different market environments since 2005.
Please note, past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.
*The target yield quoted is an estimate and is not guaranteed. It is the sum of the four quarterly distributions that comprise the fund year, each calculated by dividing the quarterly distribution amount by the unit price at the start of that quarter. The Manager will notify registered unitholders if the target yield changes.
Could Maximiser meet your investment needs?
Find out more about the Maximiser strategy:
- How the strategy works
- How it differs from other stock-market based income investment strategies
- What the risks are
Which Maximiser fund could be suitable for you?
Find out more about the Maximiser funds:
Schroder Income Maximiser invests in a carefully selected portfolio of UK company shares, targeting a a 7%* income yield
Schroder Asian Income Maximiser provides exposure to stockmarket opportunities in some of the world’s most dynamic economies, from across the Asia Pacific region, excluding Japan. It targets a 7%* income yield.
Confirm your understanding of the Maximiser strategy
Be an informed investor. This short test will help confirm how well you understand the Maximiser strategy.
Which of the following statements about the Maximiser strategy is correct?
a) It’s a stock-market based investment focused on delivering a sustainable, high level of income
b) It’s a cash-based savings account focused on delivering a sustainable, high level of income
Schroders’ range of Maximiser funds employ a tested stock-market based investment strategy focused on delivering a sustainable, high level of income. The Maximiser funds invest in the stock-market to provide income because this has the potential to deliver attractive returns over the long-term. As the economy grows over time, the stock-market, which reflects the value of companies as a whole, tends to rise and many companies are able to increase their payments, or dividends to shareholders.
a) It’s a low risk investment, suitable for providing income over a short period
The Maximiser funds invest in the stock-market to provide income because this has the potential to deliver attractive returns over the long-term. As the economy grows over time, the stock-market, which reflects the value of companies as a whole, tends to rise and many companies are able to increase their payments, or dividends to shareholders. You should be aware, however, that your capital is at risk with a stock-market based investment, unlike with a savings account. This means there’s a chance that you may not get back the original amount invested when you come to sell your investment. On a day-to-day basis, stock-market based investments can also be subject to greater up and down movements than some other investments, such as bonds, which offer a fixed income stream. So if you’re specifically seeking a low risk investment or expect to invest for less than three to five years, the Schroder Maximiser funds will not be for you.
b) It’s an investment that moves up and down with the stock-market, which is only suitable for providing income when investing for 5 years or more
a) It targets a 7% (not guaranteed) annual yield from a combination of dividends paid by companies and an income enhancement strategy using ‘covered call’ options
b) It targets a 7% (not guaranteed) annual yield from company dividends
Schroders Maximiser strategy targets income from two sources: The first of these is the natural income provided by company dividends. Our fund managers invest in a well diversified portfolio of company shares with a target of achieving an annual yield of around 3 ½%. The second is a tested “covered call option” income enhancement strategy. Many Financial institutions are willing to enter into contracts relating to individual shares whereby they agree to provide an upfront payment in exchange for any rise in the share price above a certain level over a set period of time. These are known as “covered call options”, which are categorised as “derivatives”. Our fund managers sell these option contracts on a recurring basis, typically for three month periods. The upfront payments from buyers are used to help boost the natural annual dividend by around a further 3 ½%. The term “derivatives” sometimes sets off alarm bells amongst investors, as some can be risky. However, there is no associated risk in using them for Maximiser investors other than the ceiling they put on the potential growth from the stocks they relate to.
a) Long-term total returns made up of income and capital growth are likely to be the same as they would be if the Maximiser strategy was not applied
When considering the Maximiser funds it is important to understand that total returns, made up of income and capital growth, tend to be slightly lower over the long term than those generated by the same investments without the option strategy. This is due to the cap on potential growth. However, during periods where the market is falling, the upfront payments can help to cushion the funds from the full impact. The cushioning is limited to the amount received from selling options.
b) Long-term total returns made up of income and capital growth are likely to be slightly lower than they would be if the Maximiser strategy was not applied
What are the risks?
- The target yield quoted is an estimate and is not guaranteed. It is the sum of the four quarterly distributions that comprise the fund year, each calculated by dividing the quarterly distribution amount by the unit price at the start of that quarter. The Manager will notify registered unitholders if the target yield changes.
- The fund makes use of financial derivative instruments. It is expected that the strategy will typically underperform a similar portfolio with no derivative overlay in periods when the underlying stock prices are rising, and outperform when the underlying stock prices are falling, thereby reducing the volatility of returns.
- The fund intends to make regular yield payments to investors and, if its total return is not sufficient to cover these payments, these payments may reduce the fund’s capital.
- As a result of all fees being charged to capital, the distributable income of the fund may be higher but there is the potential that performance or capital value may be eroded
- Funds which invest in a smaller number of stocks can carry more risk than funds spread across a larger number of companies.
- The fund is not tied to replicating a benchmark and holdings can therefore vary from those in the index quoted. For this reason the comparison index should be used for reference only.
- Schroder Asian Income Maximiser only: Investors in emerging markets should be aware that this can involve a higher degree of risk. Less developed markets are generally less well regulated than the UK, investments may be less liquid and there may be less reliable arrangements for trading and settlement of the underlying holdings.
- Schroder Asian Income Maximiser only: The fund holds investments denominated in currencies other than sterling investors should note that exchange rates may cause the value of these investments, and the income from them, to rise or fall.
Investing in a Maximiser fund
These statements are designed to help determine whether a Maximiser fund might be suitable for you. If you disagree with any statement, the fund will not meet your needs.
- I accept that income payments will reduce capital growth when the primary objective is high income
- I’m comfortable with the risks associated with investing in equities
- I’m prepared to take some risk with my capital in order to generate income and am not looking for a low risk fund
- I’m comfortable with the use of derivative contracts, which derive their value from stocks, to enhance income
- I expect to invest for the long term (five years or more).
Speak to your financial adviser today, or contact Investor Services to invest now.
0800 718 777* | firstname.lastname@example.org
*Please note that Schroders is not authorised to give you advice on your investment.
Please note, past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested