Diversifying beyond traditional asset classes

Why should clients consider Alternatives?

The Global Financial Crisis (GFC) permanently changed investors’ perceptions of important concepts such as diversification and correlation. The Covid-19 pandemic reasserted these concerns after a period of comparative stability. Extraordinary monetary policy measures implemented by central banks around the world - following both crises - continue to skew investment returns and tighten the relationships between equities, bonds and other risky assets, making diversification harder to achieve than ever before.

Despite this, investors still retain long-term ambitions to generate income and/or capital growth, but there is now much greater awareness of the importance of protecting their money from market falls and creating genuine diversification. Alternatives can help investors to build robust portfolios to withstand a range of different market environments.

What is Alternatives at Schroders?

Schroders has a broad range of alternative investment strategies, including hedge funds1, fixed income alternatives and commodities. These strategies invest primarily in public markets, and most deploy alternative investment techniques such as investing in both long and short2 securities. As a result, they are typically less correlated to mainstream markets.

Many of our public market alternative investment strategies are structured within a European-regulated, mutual fund3 format. This means generally access is easier, liquidity is higher and transparency is better, compared to unregulated offshore funds.

Schroders also has alternative investment strategies that invest in private markets, such as real estate, private equity, private debt and infrastructure – for more information please click here.

Why Schroders for Alternatives?

Schroders has over 40 years of alternatives experience, and offers access to over 30 strategies.

Our alternatives business is forward-looking and aims to be distinctive in the following four key areas: Impact, Collaboration, Innovation, and by having a Solutions mindset.

Impact - our ability to use Schroders’ market leading sustainability capability to deliver long-term value to our clients, while understanding how our investments impact the wider world.

Collaboration – our breadth of expertise and culture of collaboration enables Schroders to create unique insights and generate better results for our clients.

Innovation – Schroders has a history of innovation to meet the ever-changing needs of our clients and build long-term partnerships.

Solutions – the strength of Schroders’ Solutions platform is in its breadth of investment capabilities and our expertise to create highly distinctive alternatives solutions for our clients.

1 Hedge funds are funds that target high positive returns in any market environment through the use of non-traditional portfolio management techniques. They are typically only suitable for sophisticated investors as hedge funds can be more complex compared to traditional investments such as mutual funds.
2 A long/short strategy is used primarily by hedge funds and involves taking long positions (buying a holding) in stocks that are expected to increase in value and short positions (borrowing a stock you don't own and selling it in the hope of repurchasing it at a lower price to return to the stock lender) in stocks that are expected to decrease in value.
3 Mutual funds pool money from a large number of investors with similar goals into a single investment product. They are managed by a dedicated investment professional (commonly know as the portfolio or fund manager) and can invest in tens to thousands of securities from a specific asset class or a range of asset classes.

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Schroders is a world-class asset manager operating from 38 locations across Europe, the Americas, Asia, the Middle East and Africa.

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