Schroders to launch income Maximiser fund of funds

Schroders is planning to launch a fund of funds based on its onshore Income Maximiser range and a selection of fixed income products, offering a yield of around 6% a year.

The fund of funds will be managed by Thomas See, head of the firm’s structured fund management, and will pay out a monthly income distribution while targeting a volatility level similar to the average of the Cautious Managed sector. 

Schroders’ three-strong onshore Maximiser range comprises the Income Maximiser, Asian Income Maximiser and Global Property Income Maximiser funds, the latter of which was launched in February this year.

Robin Stoakley, managing director of UK intermediaries at Schroders, said: ‘We are looking to launch the fund as a fettered product based on a number of our funds, with a total expense ratio (TER) of around 1.5% or less. We are looking internally rather than at external funds to offer this very competitive TER.’

The popular £800 million Schroder Income Maximiser fund, managed by See, has a target yield of 7% a year. The fund uses an options overlay to supplement the underlying dividends, which is managed by the firm’s structured investments team. The enhanced income is produced by giving up some potential capital growth in each stock, which is capped at a certain level.

The firm’s Asian Income Maximiser, launched in April last year, is co-managed by See and Richard Sennitt, who is responsible for the stock selection and is also manager of the Schroder Asian Income fund.

The Global Property Income Maximiser is co-managed by Jim Rehlaender, who selects the global property securities, as well as Al Otero, who runs the fund’s yield enhancement strategy.

Over three years to the end of July, the Income Maximiser fund returned 30.25% compared to the FTSE All Share total return of 22.76%.