product launch| The new euro-denominated share class will act as a buffer from the dollar weakness predicted by schroders
The Schroder Emerging Markets Debt Fund has reduced currency risk for European investors by introducing a share class hedged into euros. In a separate development the National Bank of Kuwait has also selected Schroders to be its advisor on its multi-manager product.
The introduction of the euro-denominated class will mean that European investors will also be significantly insulated from the further dollar weakness anticipated by the team. The fund is currently avail- able in a dollar-denominated share class.
Geoff Blanning, manager of the Schroder ISF Emerging Markets Debt Fund, said: "Most EMD benchmarks tend to be heavily biased towards a small number of major emerging markets. This results in returns that are dependent on a narrow range of countries, and this inevitably leads to high volatility and considerable risk in portfolios.
"Another significant benefit of being unrestricted by a benchmark is that we can build large cash positions when we believe market conditions dictate that it would be the best investment decision. This is an extremely important feature in the volatile world of emerging markets debt where the ability to adopt defensive positions is crucial."
According to Blanning many of the emerging market currencies appear cheap against the dollar and the structural account deficit in the US, and its weak economy make the dollar vulnerable to renewed pressure. "Capitalising on the divergence between the local currencies and the dollar is something we expect will be a significant contributor to fund performance," he added.
In a separate move, the National Bank of Kuwait has appointed Schroders to advise on its new multi-manager Fundselect product.
In the Fundselect product, the client"s cash is invested in one of eight model portfolios, representing a range of risk profiles, but all designed to minimise volatility and maximise returns.
The portfolios combine Schroder"s asset allocation, fund selection, portfolio construction, risk management and performance measurement skills with Standard & Poor"s full research capabilities. They invest in a best of breed selection of investment funds from a range of fund management houses.
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