Schroders launches Schroder ISF Asian Dividend Maximiser
Schroders announces the launch of Schroder ISF1 Asian Dividend Maximiser, which will provide exposure to high dividend stocks in Asia- Pacific (ex-Japan), while targeting a regular monthly yield amounting to 7% p.a.
The Fund will be similar to the existing UK-domiciled fund, Schroder Asian Income Maximiser. The new fund employs the same two-step ‘Maximiser’ strategy, which adds a covered call option overlay to an actively managed portfolio of higher-yielding Asian stocks to deliver the enhanced level of yield.
The investment team for the new fund will be the same as the UK domiciled version, with Thomas See, Head of Structured Fund Management, responsible for the overlay strategy, and Richard Sennitt, Fund Manager of Schroder Asian Income Fund, responsible for stock selection.
The Fund will also follow a similar stock selection strategy to the successful Schroder Asian Income Maximiser2 , but the focus will be on large and mid cap stocks, with a market cap at the time of initial investment typically in excess of US$2bn (subject to market conditions).
It is intended that a portion of the portfolio will be left without call options, allowing the managers to invest in stocks and markets where option activity may be more limited, or where the upside potential may be particularly strong. The proportion overwritten will depend on the prevailing market conditions and will be used by the managers to deliver the enhancement required for the 7% target yield. The overwritten portion will have the benefit of the first capital growth up to the pre-agreed level above which upside is sold, within each three-monthly overlay period.
The Maximiser strategy is currently employed in seven listed UK and Luxembourg domiciled funds, with a total of US$3.9bn in assets under management3.
Richard Sennitt, co-manager of Schroder Asian Income Maximiser and co-manager of Schroder ISF Asian Dividend Maximiser, said:
“Asia, as a region, offers investors good diversification in the form of more companies from which to draw income. Opportunities in Asia are driven by strong fundamentals despite current talk of tapering and slower global growth dynamics. We also continue to believe that a focus on dividends remains one of the strongest equity strategies over the long term.”
Thomas See, co-manager of Schroder Asian Income Maximiser and co-manager of Schroder ISF Asian Dividend Maximiser, said:
“Schroders’ Maximiser strategy has proven to be durable for enhancing equity yield in all market conditions. Our flagship fund, Schroder Income Maximiser, has demonstrated this over the past eight years and over a full equity market cycle – during one of the most severe equity market falls and then over an equally sharp rebound in the market. “For an investor able to accept the inherent risk in an equity investment, the Maximiser strategy has the advantage of drawing from two sources of yield, stock dividends and call option premia, which are both independent of low interest rates, which is depressing investment returns and making it hard for investors to find yield.”
Carlo Trabattoni, Head of Pan-European Intermediary Distribution and GFIG at Schroders said:
“As the hunt for income in this low interest rate and low growth environment intensifies, investors are looking further afield to Asia as a source of good quality companies and consistent income. Schroder ISF Asian Dividend Maximiser not only offers investors a high initial yield, but also the prospects of good income and capital growth, so we believe it is a very attractive proposition in the high income space.”
1 Schroder International Selection Fund is referred to as Schroder ISF
2 SIL Asian Income Maximiser has returned 13.4% over 1 year, 34.7% over 3 years and 38.8% since launch (1 June 2010. Performance calculated A Acc, bid to bid net income reinvested as at 31 July 2013.
3 Schroders as at 31 August 2013
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Schroders is a global asset management company with £255.8 billion (EUR298.5 billion/$388.0 billion)* under management as at 30 June 2013. Our clients are major financial institutions including pension funds, banks and insurance companies, local and public authorities, governments, charities, high net worth individuals and retail investors.
With one of the largest networks of offices of any dedicated asset management company, we operate from 34 offices in 27 countries across Europe, the Americas, Asia and the Middle East. Schroders has developed under stable ownership for over 200 years and long-term thinking governs our approach to investing, building client relationships and growing our business.
*Source: Schroders, all data pro forma as at 30 June 2013, including Cazenove Capital assets under management Further information about Schroders can be found at www.schroders.com.
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