Schroder Long Duration Investment-Grade Bond Fund
Schroder Long Duration Investment Grade Bond Fund seeks to achieve a total return that exceeds that of the fund's benchmark, the Barclays US Long Government/Credit Bond Index.
The fund uses a value-driven approach and seeks to generate return by investing predominantly in a portfolio of investment grade, fixed income securities. Long bonds for long liabilities—investing to correspond with liabilities—has been a powerful theme of the Schroders Value team for decades. The strategy is duration neutral and does not incorporate interest rate forecasts or speculation.
The fund seeks to add value by capitalizing on imbalances in the relationships among sectors and individual bonds. We believe that investing in undervalued sectors and bonds and selling expensive ones using a relative value assessment is the ideal process to capture value over the long term.
The fund typically invests in US dollar-denominated fixed income including governments, corporate bonds, sovereign and supranational entities, as well as municipal bonds. There is no exposure to currency risk, high yield bonds or emerging market debt.
|Fund Share Class||Month
|Annualized Return as of --|
Performance data quoted represents past performance, which is no guarantee of future results. Investment return, yield and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Performance for less than one year is not annualized.
|Benchmark||Barclays U.S. Long Government / Credit Bond Index|
|Fund Assets *||N/A|
|Min. Subsequent Inv.||$1,000|
* As of
Fees (As of March 1, 2020)
|Distribution (12b-1) Fees||NONE|
|Total Annual Fund Operating Expenses||0.62%|
|Less: Expense Reimbursement2||(0.30)%|
|Net Annual Fund Operating Expenses||0.32%|
(1) Other Expenses are based on estimated amounts for the current fiscal year.
(2) In order to limit the Fund’s expenses, the Fund’s adviser, Schroder Investment Management North America Inc. (“Schroders” or the “Adviser”), has contractually agreed through February 28, 2021 to waive its fees, pay Fund operating expenses, and/or reimburse the Fund to the extent that Total Annual Fund Operating Expenses (other than acquired fund fees and expenses, other indirect acquired fund expenses, interest, taxes, and extraordinary expenses), for the Fund’s Investor Shares, exceed 0.32% of Investor Shares’ average daily net assets. The expense limitation may only be terminated during its term by the Board of Trustees.
The US Multi-Sector Fixed Income team is made up of several New York based portfolio managers dedicated to value-oriented fixed income, who are supported by an experienced team of more than 30 global credit analysts, with geographical and industry expertise.
Major imbalances exist in the relationship between individual bonds or sectors, and are caused by the ebb and flow of supply and demand, as well as sentiment and positioning. These are far more powerful factors in driving valuations than changes in fundamentals of investment-grade bonds. We believe that these market anomalies can be exploited to generate returns.
We believe that undervalued bonds will outperform overvalued bonds and our strategy is focused on purchasing bonds that we believe are undervalued. When, in our view, bonds become fully priced, we seek to exchange them for better valued issues.
In our investment process, portfolio management and research are an integrated function performed by the portfolio management team. Portfolio managers also have access to a team of credit analysts, who follow a rigorous research framework that combines fundamental research and relative value assessment. Investment decisions are collaborative, and are not made using a separate committee structure or by a portfolio manager in isolation.
Our investment process is based on three components:
- Sector and security inputs
- Credit research
- Portfolio construction
Sector and security inputs
Relative value analysis is used to position and concentrate portfolios in what we view as the most undervalued securities within the most undervalued sectors. We analyze historical spread relationships among sectors and securities and also look at dynamics of supply and demand, and sentiment and positioning driving valuations. Broad sector and industry research determines whether an area of the market is under pressure for valid reasons or is truly under or over priced relative to fundamentals. The portfolio manager’s direct interaction with the market is key in judging the supply, demand and/or other technical and temporary factors that drive price anomalies in the market.
Our process does not manage overweight/underweight positions relative to the benchmark. A security’s inclusion or exclusion from the index has no effect on our decision process or willingness to invest in a bond or sector.
Securities within the investment-grade universe that meet individual valuation considerations and fit the desired portfolio structure requirements receive special scrutiny by portfolio managers performing fundamental research analysis.
Portfolio managers are also supported by our global team of more than 30 fundamental credit analysts, dedicated to fixed income corporate and municipal credit research. Analysts perform detailed credit, issuer and industry research on more thousands of debt issuers worldwide.
There are two concurrent processes within portfolio construction: 1) individual issuer preference, which brings together sector and security inputs and credit research to select bonds and 2) portfolio design, which builds portfolios to have the appropriate attributes in line with our views.
I. Individual issuer preference
- Review general level of yield spreads and technical market factors
- Review spreads of individual bonds relative to Treasuries, swaps and to one another
- Eliminate from immediate consideration bonds that we view as expensive or of apparently ordinary value
- Apply credit research to each issuer and issue that meets initial criteria to be considered undervalued
- Develop an informal hierarchy among bonds that we view as undervalued enough to include in the portfolios
II. Portfolio construction and design
Determine desired portfolio characteristics from a fundamental investment point of view.
- Guideline compliance
- Interest rate duration and spread duration relative to the benchmark
- Sector exposures
- Yield curve positioning
Portfolios are tested for variations from policy and guidelines, and if portfolios are outside of targets, the team decides to either adjust targets or adjust portfolio positioning. These two simultaneous processes are equally important and mutually dependent.
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Please consider a fund's investment objectives, risks, charges and expenses carefully before investing. To obtain this and other information on any Schroders Fund, please click the following link: prospectuses. Read the prospectus carefully before investing. To obtain any further information call your financial advisor or call Schroder Mutual Funds at (800) 464-3108.