Diversification paramount - Schroders asset allocation survey

Schroders has undertaken its second survey of Australian brokers to gain insight into their asset allocation views.

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David Wanis
Portfolio Manager, Multi-Asset

Schroders has undertaken its second survey of Australian brokers to gain insight into their asset allocation views. Key findings include:

  • Diversification replaces growth as primary driver.
  • ASX listed stocks dominant; while direct equity and hybrids are the most popular ASX vehicles there was a clear move towards LICs at the expense of direct shares and active ETFs.
  • Asset allocation decisions have picked up at the margin, with 22% changing asset allocation in the preceding six months, up from 14 per cent.
  • Twice as many respondents think increased returns are more likely than decreased returns over the next three years.

Following the 2017 annual reporting season Schroders has again surveyed Australian brokers to gain insight into their asset allocation views. The inaugural survey six months ago highlighted the top three objectives for participating brokers were to generate income, maximise returns including franking credits, and protect capital. Two of these have fallen down the list of priorities since March.

The March survey showed that ASX listings remain the dominant implementation vehicle of choice and that on average brokers were allocating 80% to growth assets (Australian equity, global equity and A-REITs). This has remained essentially unchanged. Sentiment was positive with limited concern for an equity market correction.

In the following six months, the growth-oriented exposure and lack of concern about a market correction have both proven well founded. Equity markets have delivered positive total returns (+1% in Australia, +10% in global equities (A$ hedged) and -1% in A-REITs). Although not overly represented in broker portfolios, returns from Australian fixed income have also been positive over that time delivering +2.5% returns.

In this second survey we received more than 50 responses, which is of sufficient size to be useful but still a small enough sample that there may be some inherent biases. We describe some of the key findings from the survey as well as the interesting changes from the inaugural survey in March 2017.

Figure 1: Investment Objectives in order of preference (with change from previous survey in parentheses)


Figure 2: Vehicles used to implement objectives



Figure 3: Which vehicles on the ASX are preferred?


Figure 4: Current asset allocation being advised to your clients


Figure 5: How often do you change a client’s asset allocation?

Figure 6: What are the key barriers to making more frequent rebalancing decisions on behalf of your clients?


Figure 7: What are your market return expectations over the next 3 years?



How is Schroders positioned in the Real Return Active ETF (ASX: GROW)?

Figure 8: Real Return (ASX: GROW) Portfolio


Two of the main questions we have received since the launch of GROW have been related to the performance of the ETF relative to the unlisted managed fund strategy on which it is based, and the real world costs of buying and selling the fund. Based on daily data, the net of fee performance and volatility of the unlisted fund versus the active ETF since its launch are almost identical:



The dollar weighted realised offer spread (applicable to buys) has averaged 32bp on all trades since inception of the active ETF on 9 August 2016.  The dollar weighted bid spread (applicable to sells) has averaged 34bp. Blue lines are trades purchasing the fund while red lines are trades selling the fund.



 To find out more about the Schroders Active ETF click here 




Read full report20171020 Broker Survey_new branding
0 pages187 KB

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David Wanis
Portfolio Manager, Multi-Asset
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