Schroders has announced several changes to its UK equities business including revamping a multi-manager fund and pricing review and as they look to meet “client’s evolving needs”, Investment Week can exclusively reveal.
Among the changes is the refocusing of the Schroder Multi-Manager UK Growth fund, which will change to the Schroder UK-Multi-Cap Income fund and be run by Graham Ashby and Duncan Green, who joined from Santander last year.
The £11.9m fund had been invested in other UK funds such as Jupiter UK Special Situations, GAM UK Equity Income and RWC UK Equity Income.
According to Doug Abbott, head of UK intermediary at Schroders, the fund used to be home for Cazenove clients' money, but the wealth management arm has since changed tact, causing the AUM of the fund to reduce.
Along with that Schroders "have seen demand reduce for a multi manager, UK growth, type strategy" and that the style costs "quite a lot of money".
"You know, because if you allocate across, across a whole bunch of managers who are investing actively, you end up with a fund that's quite high cost," Abbott said.
So as part of the refresh Schroders have also changed the cost of the fund. While its annual management charge has increased slightly from 0.72% to 0.75% the OCF has reduced substantially from 1.39% to 0.75%.
The refresh will mean a 100% portfolio turnover and any costs incurred in respect of this restructure was borne by the fund. Schroders had estimated these costs to be 0.57% of the fund's value, according to a document seen by Investment Week.
Ashby and Green will target a dividend yield of 5% per annum.
Robin McDonald and Joe Le Jehan, who formerly ran the Schroder MM fund, will continue to run funds within the rest of Schroder's Multi-Manager range.
As part of a pricing review Schroders have undertaken "competitive reductions" across its UK equity product range.
For example, the Schroder Prime UK Equity fund (I units) annual fee has been reduced from 52bps to 30bps. The fund is managed by Sue Noffke, Andy Simpson and Matthew Bennison.
Fees have also been reduced for the Schroder UK Alpha Income Fund and the Schroder UK Alpha Plus fund. The Z units are priced at 75bps and 80bps per annum respectively. The Schroder Income Growth fund, also recently adjusted its management fee lower to 45bps per annum.
"Every year, we now have to look at our assessment of value as well and consider these things," explained Abbott. "Where we're pricing now is far more competitive and compelling and does offer good value for money for the for the high-quality active management resource you're getting access to."
Commenting on the timing of the review, Noffke, head of UK equities, said the UK is becoming a "vibrant marketplace".
"The UK equity market has been under something of a cloud in terms of uncertainty post Brexit, and Covid-19," she said. "If I look at the level of activity from overseas, private equity buyers and a number of corporates looking to consolidate, we've seen one of the busiest first half of 2021 for many, many years."
She added that with the upcoming regulator reviews, such as the Hill review, the UK equity market is becoming "fit for the future".
"On a stock-by-stock basis, we can find many compelling situations, be it on a value basis or an opportunity basis that really excite our individual managers," she concluded. "So I think now is the time for investors to focus on that. Otherwise, the arbitrage opportunity will be exploited by outside participants."