Schroders favours Aussie equities
Schroders has been adding exposure to Australian equities after cutting its equity weighting prior to the COVID-19 pandemic.
The Schroder Real Return managed by Simon Doyle, now had 28% allocated to equities which was an increase from less than 20% previously and he said a large portion of this was in Australian ones.
The majority of its equity exposure was held in Australian equities with a smaller percentage in global equities.
In a webcast, Doyle said the fund was defensively positioned as it was concerned about valuations in equity and credit markets.
“We added 7.5% back, this was not as much as we would have been liked but adding too much too early could be costly. A lot of this was in Australian equities as we are more comfortable with them compared to other markets such as the US,” he said.
“We expect to add risk selectively through this volatility but a clear opportunity is yet to emerge. This is evolving quickly but has some way to play out. We are drawing on our experience through the Global Financial Crisis to identify solid medium-term investment opportunities, not trying to time the market bottom.”
In the fund’s April factsheet, Doyle had previously stated the containment of COVID-19 in Australia had been more effective than other developed markets although they were concerned about the degree of concentration of the Australian market in banks.
Elsewhere the fund had reduced duration by 0.5 years and been buying Australian high yield debt.
The Schroder Real Return fund has returned 0.35% over one year to 30 April, according to FE Analytics, versus losses of 2.5% by the mixed asset flexible sector.
Performance of Schroder Real Return versus mixed asset flexible sector over one year to 30 April 2020
AUTHOR
Laura Dew
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