Schroders launches Advanced Beta solution for MPF Default Investment Strategy

A cost-conscious approach to seeking returns whilst aligning investor expectations against broader market movements


Schroder Investment Management (Hong Kong) Limited (Schroders Hong Kong), a wholly-owned subsidiary of Schroders plc, today announced the launch of the Schroders Advanced Beta series that is specifically tailored for the Default Investment Strategy (“DIS”) under the Mandatory Provident Fund (“MPF”) regime, as a cost-conscious yet efficient investment solution. Being the first-of-its-kind for the MPF market in Hong Kong by investment approach, Schroders’ MPF Core 60/40 strategy and MPF Core 20/80 strategy (the “Core Series”) use the Advanced Beta investment approach and are now available to MPF scheme providers to support the implementation of DIS.

Kelvin Lee, Head of Institutional Business, Hong Kong, commented:

“Schroders is an active asset manager that is highly focused on delivering solutions to clients. The specific requirements of the DIS provided us with an opportunity to introduce the Schroders Advanced Beta series, an innovative, cost-conscious solution to answer the calls for a lower cost alternative in Hong Kong. The investment strategy draws on the success of similar strategies that we have been running globally in other markets for many years.”

The Core Series reflects a quantitative index-enhanced strategy based on the MPF DIS reference benchmark (the “Reference Benchmark”). The equity component of the Core Series targets securities which exhibit certain characteristics such as attractive valuation, high quality and low volatility of active returns. The fixed income component of the Core Series selects securities based on their key characteristics such as maturity, credit rating and liquidity to construct a cost-efficient portfolio.

The Core Series uses highly efficient and advanced proprietary analysis to provide the investment recommendations for fund managers to make the final buy/sell decisions.

Kelvin Lee continued:

“Our Core Series targets to deliver above benchmark returns that, over shorter periods, have a similar level of risk compared to the Reference Benchmark, so that MPF members can better align their return expectations against broader market movements.”

“As an active manager, however, our aspiration is to add value, and to try and help MPF members make up for the impact of fees on investment returns relative to the Reference Benchmark. Thus, our fund managers design and continuously refine the investment portfolios, and make the final decisions aiming to outperform in a risk compelled manner.”

“The Advanced Beta solution brings to the MPF market the advantages of a scientific approach to active management and the efficiency offered by technology. It is a solution that is expected to run costeffectively, deliver consistent performance relative to the benchmark, and provide an alternative to existing MPF strategies.”

MPF scheme providers already using the Schroders Advanced Beta solution include Sun Life Financial, FWD, and BOCI-Prudential Trustee.

Schroders' MPF Core 60/40 strategy

Investment objective:

The objective of this strategy is to achieve capital growth by investing in a globally diversified manner.

Expected asset allocation range:

Global equities 55% to 60%
Fixed income securities and money market instruments 35% to 45%


Schroders' MPF Core 20/80 strategy

Investment objective:

The objective of this strategy is to achieve stable growth by investing in a globally diversified manner.

Expected asset allocation range:

Global equities 15% to 25%
Fixed income securities and money market instruments 75% to 85%

The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.

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Schroder Investment Management North America Inc. (“SIMNA”) is an SEC registered investment adviser, CRD Number 105820, providing asset management products and services to clients in the US and registered as a Portfolio Manager with the securities regulatory authorities in Canada.  Schroder Fund Advisors LLC (“SFA”) is a wholly-owned subsidiary of SIMNA Inc. and is registered as a limited purpose broker-dealer with FINRA and as an Exempt Market Dealer with the securities regulatory authorities in Canada.  SFA markets certain investment vehicles for which other Schroders entities are investment advisers.”

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