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Alternatives

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.

Explore all Strategic Capabilities

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.

What are the risks?

Past performance is not a guide to future performance and may not be repeated.

The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of any overseas investments to rise or fall.

Please note that there is no guarantee that liquid alternative products will achieve its objective.

Important information: The views and opinions contained herein are those of the authors, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This webpage is intended to be for information purposes only. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. Reliance should not be placed on the views and information in the webpage when taking individual investment and/or strategic decisions. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.  The data contained in this webpage has been obtained from sources we consider to be reliable. No responsibility can be accepted for errors of fact and the data should be independently verified before further publication or use. The sectors shown are for illustrative purposes only and not to be considered a recommendation to buy or sell. Exchange rate changes may cause the value of any overseas investments to rise or fall. In North America, this content is issued by Schroder Investment Management North America Inc., an indirect wholly owned subsidiary of Schroders plc providing asset management products and services as a US SEC registered investment adviser and in the capacity of Portfolio Manager with the securities regulatory authorities in Canada. For all other users, this content is issued by Schroder Investment Management Limited, 1 London Wall Place, London EC2Y 5AU. Registered No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.

Schroders is a world-class asset manager operating from 37 countries across Europe, the Americas, Asia, the Middle East and Africa.


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