Group to close style funds to make way for range of concentrated portfolios
Schroders is to close its style-based funds and launch Europe and Japan-focused portfolios as part of its fund rationalisation planned for the autumn.
In a consolidation from 34 down to 26 funds, Schroders will merge away the growth and value portfolios it launched almost three years ago and concentrate instead on mainstream and focused vehicles.
The group will merge its Eurotech, European Dynamic Growth and European Active Value funds into one portfolio, Schroder European Alpha Plus, to be managed by Adriaan de Mol van Otterloo.
Similarly, it will merge three Japan funds, Japan Dynamic Growth, Japan Active Value and Japan Smaller Companies into one fund, Schroder Japan Alpha Plus, to be managed by Nathan Gibbs.
Like Richard Buxton's UK Alpha Plus fund, both portfolios will target absolute returns and will not be constrained by benchmarks, enabling the managers to put their strongest convictions into the portfolio.
Robin Stoakley, executive director at Schroders, said the group believes there are similar opportunities in more concentrated European and Japan vehicles as market conditions in these regions are broadly similar to those in the UK.
He said: 'We see the current volatility continuing for a prolonged period, with relatively low index growth across global markets. These sort of funds, due to their lack of constraints, have a great deal of flexibility, which is right for these conditions.'
The £1.54m UK Dynamic Growth fund, managed by Simon Brazier, and the £3.26m UK Active Value fund, managed by Ben Whitmore, are to be closed as part of the rationalisation process.
The £2.08m US Active Value fund, managed by Zoe Maclachlan, and the £1.14m US Dynamic Growth fund, run by Simon Webber, will also be merged away.
Unitholders in these four funds will be offered free switches into any other Schroders fund. For investors in the two UK funds, the group is suggesting a move into Buxton's UK Alpha Plus fund, while holders of the US funds are advised to switch into Schroder North America, managed by Adrian Cronje.
The group will be writing to its unitholders later in the month informing them of the changes and their options.
Stoakley said: 'In this market environment, we want to make sure we have the most efficient fund range we can, covering all the major markets. We looked at all the small funds that are uneconomic to run and decided to merge or close them.'
According to the IMA, in January 2000, there were 1,787 UK authorised funds. By January 2003, this had grown to 1,951. Stoakley said in his view, more groups will be consolidating their ranges going forward.
Schroders will not be converting its unit trust range into Oeics as part of the rationalisation. Stoakley said if under the FSA's most recent proposals unit trusts are able to offer multiple share classes, there is no point converting them to Oeics.
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