Schroders launches Global Credit Income fund in Hong Kong

Dynamic allocation across global bond markets helps deliver stable stream of income to investors in all market environments

12/03/2018

Important Information
The fund invests primarily in fixed and floating rate securities issued by governments and companies worldwide.
1. For share classes with a general dividend policy, expenses will be paid out of capital rather than out of gross income. The amount of distributable income therefore increases and the amount so increased may be considered to be dividend paid out of capital. Share classes with a fixed dividend policy may pay out both income and capital in distributions. Where distributions are paid out of capital, this amounts to a return or withdrawal of part of your original investment or capital gains attributable to that and may result in an immediate decrease in the net asset value of shares.
2. The fund invests in debt securities which may be subject to credit and counterparty risk, interest rate risks, credit ratings risk, credit downgrading risk, liquidity and volatility risk and valuation risk. The fund may invest in unrated and non-investment grade securities which are exposed to greater credit risks.
3. Investment in sovereign debt obligations issued or guaranteed by governments or their agencies of certain developing countries and certain developed countries may expose the fund to political, social and economic risks. The fund may suffer significant losses upon defaults by government entities.
4. The fund may invest in emerging markets which are subject to political and economic, legal and regulatory, market and settlement, execution and counterparty and currency risks.
5. The fund may use derivatives to meet its specific investment objective. Derivative exposures may involve credit risk and counterparty risk, liquidity risk, valuation risk, volatility risk, over-the-counter transaction risks and hedging risk. In adverse situations, the use of hedging instruments may become ineffective in hedging and the fund may suffer significant losses.
You should not make any investment decision solely based on this document. Please read the relevant offering document carefully for further fund details including risk factors.

Schroders announced today the launch of Schroder ISF¹ Global Credit Income (the Fund) in Hong Kong. The Fund aims to achieve capital growth and deliver a consistent and attractive level of income by investing globally in investment grade, high yield, developed and emerging markets sovereign and municipal bonds, and asset-backed securities. The Fund intends to make a fixed monthly payout of 4.5% per annum². It also places an emphasis on managing risks to investors’ capital.

Chris Durack, CEO of Hong Kong and Head of Institutional Business, Asia Pacific, said: “Achieving an acceptable and reliable source of income is important to many investors, particularly in an environment where interest rates remain low and market volatility may become more frequent and intense. At Schroders, we believe by investing across the global credit universe, we can build a portfolio to provide a relatively attractive level of income with a sensible balance of risk. We recognise that investors seeking income can be more sensitive to capital loss, and as such we are committed to capturing the best opportunities while managing the risks for them.”

Schroders takes an innovative theme-based investment approach that allows the Fund to identify idiosyncratic opportunities and risks from secular trends, such as macroeconomics, demographics, technology and consumer demand.

Patrick Vogel, Head of Credit Europe, said: “We assess how the world is changing around us and understand how the companies we invest in are adapting to these changes which in turn affect their creditworthiness. The global credit market is highly complex with various parts experiencing different levels of sensitivity to economic cycles. By dividing the global credit market into multiple bespoke sectors and analysing the corresponding return distribution, we are able to understand where drawdown risks might occur, and in turn manage potential loss and volatility relative to the global credit market effectively.”

Michael Scott, Credit Fund Manager, said: “Our unique investment approach has allowed us to capture opportunities from emerging markets and the rebound of commodities last year. In 2018, we think certain emerging markets are still in a relatively good phase of the credit cycle, such as the telecom and services sectors in Brazil, where real wages are growing, unemployment is falling, and the central bank may continue to cut rates, which will help propel the country’s economic and credit cycle. In developed markets, we believe credit fundamentals will remain strong, and we think default rates are likely to stay low across developed markets. However, as certain central banks look to cautiously remove accommodation, we do expect volatility to pick up. That is actually good news for active managers like Schroders, because it allows us to exploit these cheaper valuations.”

Chris Durack concludes: “Schroders is committed to delivering sustainable income solutions for investors in Hong Kong. The launch of our global credit income fund complements the suite of income-focused strategies that can help investors navigate through different market cycles to meet their income and growth objectives.”

¹ Schroder International Selection Fund is referred to Schroder ISF
² Fixed monthly payout of 4.5% p.a. (Applicable to A Dis USD and HKD classes. Dividend may be paid out of capital, pay attention to important information 2)

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This document is intended to be for information purposes only and it is not intended as promotional material in any respect nor is it to be construed as any solicitation and offering to buy or sell any investment products. The views and opinions contained herein are those of the author(s), and do not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. The material is not intended to provide, and should not be relied on for investment advice or recommendation. Any security(ies) mentioned above is for illustrative purpose only, not a recommendation to invest or divest. Opinions stated are valid as of the date of this document and are subject to change without notice. Information herein and information from third party are believed to be reliable, but Schroder Investment Management (Hong Kong) Limited does not warrant its completeness or accuracy.
Investment involves risks. Past performance and any forecasts are not necessarily a guide to future or likely performance. You should remember that the value of investments can go down as well as up and is not guaranteed. You may not get back the full amount invested. Derivatives carry a high degree of risk. Exchange rate changes may cause the value of the overseas investments to rise or fall. If investment returns are not denominated in HKD/USD, US/HK dollar-based investors are exposed to exchange rate fluctuations. Please refer to the relevant offering document including the risk factors for further details.
This material has not been reviewed by the SFC. Issued by Schroder Investment Management (Hong Kong) Limited.

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Schroders launches Global Credit Income fund in Hong Kong

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