Schroders launches multi-asset Article 8 fund with ILS component & HSBC reach

Global asset manager Schroders has launched a new Article 8 multi-asset class investment fund that will incorporate insurance-linked securities (ILS) and will be distributed through an exclusive deal with HSBC to begin.

The Schroder ISF Dynamic Income will be exclusively available to HSBC Global Private Banking and Wealth clients for six months across Asia, Europe, and the Middle East, under the distribution agreement.

The investment fund was designed to respond to the current era of high inflation and interest rates, the asset manager said.

HSBC and Schroders have recognised “that successful income investing will require a well-diversified and highly flexible approach when compared to the previous decade.”

The idea is to deliver “an attractive and resilient income stream” through investments into a diversified portfolio of assets, including alternative asset classes.

The Schroder ISF Dynamic Income fund will allocate its capital to worldwide opportunities in equities, fixed income, and alternative investments such as convertibles bonds, securitised debt, insurance-linked securities, and emerging market debt, the company explained.

The fund will also seek to provide investors with capital growth through controlled thematic opportunities and regular income components, helping them to ride out market volatility.

The new Fund will be actively managed by Schroders’ Head of Multi-Asset Growth and Income Remi Olu-Pitan, and Head of Multi-Asset Income Dorian Carrell, with a goal of capturing quality global income opportunities.

It will also incorporate environmental and/or social characteristics, within the meaning of Article 8 of the SFDR, Schroders said.

When it comes to the insurance-linked securities (ILS) component, Schroders has a dedicated specialist ILS unit within the Schroders Capital division, with significant catastrophe bond and broader private ILS strategies already under management there.

The inclusion of insurance-linked securities (ILS) such as catastrophe bonds within multi-asset strategies is increasingly a strategy of major asset management groups. Having dedicated ILS expertise means Schroders can benefit from knowledge and also access to opportunities within the ILS space, for its multi-strategy diversified and alternatives fund offerings.

Schroders has sped up the incorporation of ILS assets into multi-asset strategies in recent months, having launched the Schroder Alternatives Fund to target UK investors, with a component of that strategy also including ILS investments.

Peter Harrison, Group Chief Executive Officer of Schroders, commented, “What has worked over the past decade may not work in the next decade for investors in search of income and capital growth. In a world of elevated inflation and interest rates, investors’ capital needs to work harder.

“This exclusive distribution arrangement reflects the shared commitment of Schroders and HSBC to delivering value-added investment solutions and empowering investors with access to innovative strategies. Combining Schroders’ extensive investment expertise with HSBC’s strong distribution network, Schroder ISF Dynamic Income provides HSBC Global Private Banking and Wealth clients with a differentiated investment solution that aims to deliver consistent income and long-term capital growth.

“It also further demonstrates Schroders’ commitment to working closely with our distributors to deliver tailored investment solutions, thanks to our diversified and market-leading investment platform.”

The new investment fund is said to align with HSBC Global Private Banking and Wealth CIO’s focus on quality assets with resilient earnings, as a way to provide investors an investment entry point and diversification benefits at current market levels.

Lavanya Chari, Global Head of Investments and Wealth Solutions of HSBC Global Private Banking & Wealth, added, “We are pleased to continue our programme of global fund launches, now with an actively managed investment solution which will enable our clients to access a range of asset classes across global markets. A diversified investment approach enables our clients to stay invested through different market cycles. This launch complements our existing strong fund offering to provide an additional option for our clients to put cash to work for their portfolios.”