Save & Invest Financial Planning

Schroder Diversity Fund Update - August 2017

We met with our Schroder fund representative Sam Murphy at our Glasgow office on 2nd August. Sam answered questions posed regarding the Diversity fund range.


Diversity range

I asked about the Diversity range and why all funds we use have underperformed their peers over the past year in particular. I asked if Marcus Brooks (Fund manager) has been using derivatives to protect against the downside and, if so, is the cost of these hampering growth.

Sam advised that Marcus is not using any derivatives. The only ones being used are those used by the individual fund managers within their own funds.

Marcus’s view remains the same that we are in the late stages of both the market cycle and economic cycle. He is concerned that the bull run on equities has lasted twice the normal period and a correction is becoming increasingly likely.

He is most concerned that inflation will continue to rise, resulting in an interest rate increase and a sharp fall in bond prices. He appreciates that they have been very early in protecting against these risks but is not willing to move back into bonds to benefit from their continued growth, which may turn out to be short-lived.

Marcus believes that US equities are very over-valued. He holds US high yield bonds in all 3 funds (only 1% in Tactical).

Within the Alternatives part of the funds he holds funds such as Artemis Strategic Assets as a diversifier against an equity correction.

His equity preference is for Value funds as he believes the Quality run cannot be sustained.

The current asset allocations are:

Diversity fund

Cash 22%

Fixed Interest 10%

Equities 31%

Alternatives 32%

Diversity Income fund

Cash 19%

Fixed Interest 14%

Equities 52%

Alternatives 14%

Within the Alternatives, there are no income-generating holdings


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