Schroders has repurposed a trio of funds into sustainable mandates, offering investors access to investment opportunities across equities, fixed income and infrastructure, International Investment's sister title Investment Week has revealed.
The European Alpha Income, Global Cities Income and Absolute Return Bond funds have all received regulatory and unitholder approval to restructure as sustainable mandates: Schroder Digital Infrastructure, Schroder Sustainable Bond and Schroder Unit Trust European Sustainable Equity.
These changes come following UK-domiciled funds recording inflows of £37.1bn, which Doug Abbott, head of UK intermediary at Schroders, described as "a significant indication that UK investor demand for sustainable investment solutions has exponentially accelerated over the past few years".
"Looking ahead, we expect sustainable and impact investing to become a cornerstone of many UK investors' portfolios," Abbott said. "In response to this rising demand, Schroders ambition is to be a leading provider of sustainable funds, solutions and investment trusts to UK investors."
Schroder Digital Infrastructure will be co-managed by Hugo Machin and Tom Walker and aims to deliver long-term capital growth by investing in companies which own "mission critical and sustainable infrastructure for the growing digital economy", such as fibre-optic cables, macro towers, data centres and small cells.
Machin and Walker said: "We believe digital infrastructure is the fourth utility such is its importance to society, and for many businesses and governments it is ‘mission critical. In our view, we are in the early stages of the digital transformation, this provides a compelling growth opportunity for companies that are at forefront of this transformation and the true value of digital infrastructure is not fully appreciated by the market."
It will be available for an ongoing charges figure of 0.95%.
Schroder Sustainable Bond aims to provide investors with long-term diversified returns through a range of global sustainable bonds, delivering a total return of 2.5% per annum over the ICE BofA Sterling three-month Government Bill index, net of fees, over a three-to-five year cycle.
Managed by the Schroders Global Fixed Income and Currency team, the fund will target sovereigns which have made "appropriate progress towards meeting the United Nations Sustainable Development Goals", have explicit net zero policies and whose "political and civil freedoms are supportive of sustainable growth".
Paul Grainger, head of global fixed income and currency at Schroders, said: "For the Schroder Sustainable Bond Fund, we have developed a rigorous and transparent methodology for analysing sovereign sustainability. This complements our well-established sustainable credit approach and allows us to build holistic fixed income portfolios, which can provide our clients with long-term and diversified sustainable returns."
It will be available for an ongoing charges figure of 0.5%.
The final fund opens the firm's three-year-old European Sustainable Equity fund to UK investors via a new unit trust, offering access to the Nicholette MacDonald-Brown and Scott MacLennan-managed fund.
Along with an exclusionary screen on companies that derive 10% or more of their earnings from tobacco, weapons, fossil fuels, alcohol or gambling, the fund targets firms with sector-leading sustainability profiles.
Schroders revamps UK equities business to meet client need
MacDonald-Brown and MacLennan said: "Our sustainability purpose and performance ambitions are supported by not only the firm‘s ‘Beyond Profit' ambitions but also a team of European focused analysts and proprietary tools which adds significant depth and conviction to our research.
"The product is an option for clients seeking a concentrated, active solution with a thorough process for assessing a company's impact on society and its ability to manage key relationships long term."
It will be available for an ongoing charges figure of 0.92%
