Schroders is extending its equity income range with the launch of the Schroder UK Income Defensive fund. The portfolio, managed by Richard Lloyd, manager of the £275m Schroder Income Maximiser fund, will invest in 30-50 large and mid cap British stocks.
It will use the same techniques employed in the Schroder Income Maximiser, which was launched in November 2005. However, it will have one extra feature in that it can buy put options. These options will be used to add a defensive element to the portfolio.
Over two years to February 18 the Schroder Income Maximiser fund was ranked 19th out of 54 funds in the IMA Specialist sector, according to Morningstar. It returned 6.37% compared with a sector average return of 10.83% and a FTSE 350 average return of 6.38%.
The UK Income Defensive portfolio will be the fourth UK equity income fund in Schroders’ range.
As well as the Income Maximiser fund there is the £976.1m Schroder Income fund, which was launched in 1987, and the UK Alpha income fund, which was soft-launched in December.
Robin Stoakley, managing director of Schroders’ UK retail business, says that the new fund complements the range well.
He expects it to appeal to investors who want to know that there is a “safety net under their investment”.
“We wanted to offer the potential for growth still, but offer some protection,” he says. “Markets are in a very uncertain stage at the moment and investors are nervous, quite understandably.”
The Schroder UK Income Defensive fund opens to investors on March 7. Minimum investment in the fund is £1,000.
The initial charge is 5.25%, while the annual management fee is 1.5%.