Fact sheet: Schroder Income Maximiser

Rated Fund Information
Rated Funds Group
?Money Observer has arranged all its Rated Funds into easy to understand Rated Fund Groups, comprising funds and investment trusts.
UK EQUITY INCOME
Sector
UT UK Equity Income
Fund type
Unit Trust
Primary aim
INCOME
Why Money Observer Rates Schroder Income Maximiser

Rated Fund 2013-2017. Providing an enhanced yield using an options strategy

This fund is designed for investors who need more income than a conventional UK equity income fund can provide. Its target yield is 7 per cent and it has managed to deliver this every year since it was set up in 2005. This yield is achieved through a two-stage process of investing in stocks and then selling call options on them.

The underlying investment portfolio of 30 to 50 shares, which generates a yield of around 3.5 per cent, is managed by Nick Kirrage and Kevin Murphy. The 'overlay' strategy of selling options to boost the yield is run by Mike Hodgson.

Kirrage and Murphy describe themselves as value investors. They point out that this is an inherently contrarian approach since they believe that the best investments are found by going against the crowd.

While volatility may adversely affect the fund in the short term, they believe it is a source of long-term returns as they can take advantage of price weakness to invest in strong, yet undervalued companies. The companies they choose are also those they believe have the largest potential for dividend and capital growth.

Hodgson aims to apply the option strategy in an active and flexible manner, looking to generate just enough premia to deliver the yield that the fund targets. Some of the potential capital growth from the shares is given up as a result of this activity but over the long term the effect should be offset by the extra income generated.

3 Year Performance
Fund Performance14.4%
Average of Rated Funds Group22.3%
Sector Performance15.7%
Fund information
Fund name
Schroder Income Maximiser Z Acc
Fund manager company
Schroder UT Managers
Fund type
Unit Trust
Fund managers
  • Scott Thomsonsince 31/08/2017
  • Mike Hodgsonsince 25/07/2016
  • Kevin Murphysince 25/07/2016
  • Jeegar Jaganisince 31/08/2017
  • Nick Kirragesince 25/07/2016
Accolades
Fund objective
The fund aims to provide income and capital growth. The fund aims to deliver a target income of 7% per year but this is not guaranteed and could change depending on market conditions. At least 80% of the fund will be invested in shares of UK companies. The fund has no bias to any particular industry or size of company. The fund invests in 'value' stocks – those whose share prices appear low relative to their long-term profit potential, and which are typically paying an attractive and growing dividend. The fund generates its income from two sources; dividends received from shares in companies; and cash received from selling some potential future growth of the fund's holdings using derivatives. The fund may also invest in other financial instruments and hold cash on deposit. Derivatives will be used to achieve the investment objective and to reduce risk or manage the fund more efficiently. The strategy will typically underperform a similar portfolio without derivatives in periods when the underlying stock prices are rising, and outperform when the underlying stock prices are falling.
Benchmark
  • FTSE All Share TR
Investment style
None
Investment method
Shares
Quick stats
1 Year return
4.2%
1 Year rank in sector
39/94
Sector
UT UK Equity Income
Yield
6.9%
Ongoing charge (OCF)
?A fund’s ongoing charges figure (OCF) is similar to the old-style total expense ratio. It reflects the annual charge to investors in the fund, in percentage terms, but does not include extra performance-related fees (where these are levied) or the fund’s trading expenses on its underlying investments.
0.91%
Fund size
£1,130m (£1,045m last year)
FE Risk score
?FE Risk Scores measure the riskiness of instruments relative to the FTSE 100 index of shares. Weekly volatility is measured over three years with recent behaviour counting more heavily than earlier behaviour. Cash-type investments will have scores close to zero. Funds will tend to have scores in the 0-150 range. The FTSE 100 is always scored at 100. There is no upper limit.
85
Bid price
85.05
Offer price
85.48
Top in this sector
Fund name1 Year
Man GLG UK Income16.2%
MI Chelverton UK Eq Inc14.6%
MI DowningMthlyInc11.9%
Courtiers UK Equity Income11%
Unicorn UK Income10.9%
...more in UT UK Equity Income

Performance snapshot

Holdings snapshot

  • UK82.2%
    USA11.3%
    Australia4.9%
    Money Market3%
    Not Specified-1.4%
  • Financials31.4%
    Consumer Services20.4%
    Basic Materials12.6%
    Health Care9.5%
    Technology9.1%
  • UK Equities82.2%
    US Equities11.3%
    Australian Equities4.9%
    Money Market3%
    International Equities-1.4%

Performance vs Sector

Cumulative performance
 1 mth3 mth6 mth1 yr3 yr5 yr
Fund-3.2%2%4.2%4.2%14.4%46.6%
Sector-4.9%-1.5%-0.6%3.8%15.7%44.2%
Rank within sector9 / 994 / 984 / 9739 / 9459 / 8445 / 78
Quartile1st1st1st2nd3rd3rd
Calendar performance
 YTD - 20182017201620152014
Fund-1.2%8.4%20.7%-6.3%3.2%
Sector-4.3%11.2%9.1%4.9%2.8%
Rank within sector5 / 9972 / 944 / 8983 / 8447 / 82
Quartile1st4th1st4th3rd
Risk statistics
Alpha
?Alpha is a measure of a fund's over- or under-performance by comparison to its benchmark. If the Alpha is 5, the fund has outperformed its benchmark by 5%; so the greater the Alpha, the greater the outperformance.
0.06
Beta
?Beta estimates a fund's volatility by comparison to that of its benchmark. A fund with a beta close to 1 means that the fund will move generally in line with the benchmark. Higher than 1 and the fund is more volatile than the benchmark and vice versa.
0.89
Sharpe
?This commonly-used measure calculates the level of return over and above the return of a notional risk-free investment, such as cash. The difference in returns is then divided by the fund's volatility. The resulting ratio is an indication of the amount of excess return generated per unit of risk.
0.31
Volatility
?Volatility (or standard deviation), when applied to an investment fund, expresses its risk. It shows how widely a range of returns varied from the fund's average return over a particular period. For example, if a fund had an average return of 5%, and its volatility was 15, this would mean that the range of its returns over the period had swung between +20% and -10%.
8.94
Tracking error
?This measures the standard deviation of a fund's excess returns over the returns of an index or benchmark portfolio. As such, it can be an indication of 'riskiness' in the manager's investment style. A Tracking Error below 2 suggests a passive approach. At 3 and above the the manager will be deploying a more active investment style.
5.21
Information ratio
?This is a useful risk-adjusted measure of actively managed fund performance. It is calculated by deducting the returns of the fund's benchmark from the fund's overall returns, then dividing the result by its tracking error. The higher the Information Ratio the better. It is generally considered that a figure of 0.5 reflects a good performance, 0.75 very good, and 1.00 outstanding.
-0.15
R-Squared
?An indication of how closely correlated a fund is to an index or a benchmark. Values for R-Squared range between 0 and 1, with 0 indicating no correlation at all and 1 showing a perfect match. Values upwards of 0.7 suggest that the fund's behaviour is increasingly linked to its benchmark.
0.67
Price movement
52 week high88.52
52 week low79.08
Current bid price85.05
Current offer price85.48
Current mid price-
Region
1UK82.22%
2USA11.29%
3Australia4.94%
4Money Market2.95%
5Not Specified-1.39%
Industry sector
1Financials31.36%
2Consumer Services20.39%
3Basic Materials12.62%
4Health Care9.48%
5Technology9.12%
6Oil & Gas8.27%
7Utilities5.01%
8Money Market2.95%
9Telecommunications1.73%
Asset type
1UK Equities82.22%
2US Equities11.29%
3Australian Equities4.94%
4Money Market2.95%
5International Equities-1.39%
Individual holdings
1HSBC HLDGS6.02%
2BP5.32%
3SOUTH32 LTD4.94%
4ANGLO AMERICAN4.91%
5PEARSON4.79%
6GLAXOSMITHKLINE4.72%
7AVIVA4.53%
8ROYAL BANK OF SCOTLAND GROUP PLC4.3%
9MORRISON(WM.)SUPERMARKETS3.8%
Management
Fund manager group
Schroders
Fund manager company
Schroder UT Managers
Fund type
Unit Trust
Fund objective
The fund aims to provide income and capital growth. The fund aims to deliver a target income of 7% per year but this is not guaranteed and could change depending on market conditions. At least 80% of the fund will be invested in shares of UK companies. The fund has no bias to any particular industry or size of company. The fund invests in 'value' stocks – those whose share prices appear low relative to their long-term profit potential, and which are typically paying an attractive and growing dividend. The fund generates its income from two sources; dividends received from shares in companies; and cash received from selling some potential future growth of the fund's holdings using derivatives. The fund may also invest in other financial instruments and hold cash on deposit. Derivatives will be used to achieve the investment objective and to reduce risk or manage the fund more efficiently. The strategy will typically underperform a similar portfolio without derivatives in periods when the underlying stock prices are rising, and outperform when the underlying stock prices are falling.
Benchmark
  • FTSE All Share TR
Investment style
None
Investment method
Shares
Fund managers
NameSinceBiography
Scott Thomson31/08/2017
Mike Hodgson25/07/2016Mike Hodgson is Head of Risk Managed Investments & Structuring at Schroders and has over 25 years of experience in financial markets. At Royal Bank of Scotland (formerly of ABN AMRO) he was Global Head of Equity Derivatives Structuring and Head of Fund Derivatives Trading and Structuring.
Kevin Murphy25/07/2016Co-manager of Schroder UK Income, Schroder UK Recovery and Global Recovery funds, Founding member of the Global Value Team in 2013, Investment career commenced in 2000 in Schroders’ UK Equity fund management team, Previously sector analyst for Pan European Construction and Building Materials, Chartered Financial Analyst, Degree in Economics, Manchester University
Jeegar Jagani31/08/2017
Nick Kirrage25/07/2016Co-manager of Schroder UK Income, Schroder UK Recovery and Global Recovery funds, Founding member of the Global Value Team in 2013, Investment career commenced in 2001 within Schroders’ Pan European research team, Previously analyst responsible for a number of sectors including Transport, Metals & Mining and Aerospace and Defence sectors, Chartered Financial Analyst, Degree in Aeronautical Engineering, Bristol University
Compliance
IA Recognised, UCITS IV Compliant
Domicile
No data available.
Fund for sale in
United Kingdom
Schroder Income Maximiser A Acc
Initial charge-
Annual charge1.5%
Min single investment£1,000
Min regular saving£500
Available in ISAYes
Ongoing charge (OCF)1.66%
Total expense ratio (TER)-
Bid price109.6
Offer price110.2
Mid price-
CurrencyGBX
Price updated20/02/2018
TypeAccumulation
Institutional or retail classRetail
Domicile-
Citi codeRZ83
Schroder Income Maximiser A Inc
Initial charge-
Annual charge1.5%
Min single investment£1,000
Min regular saving£500
Available in ISAYes
Ongoing charge (OCF)1.66%
Total expense ratio (TER)-
Bid price45.16
Offer price45.39
Mid price-
CurrencyGBX
Price updated20/02/2018
TypeIncome
Institutional or retail classRetail
Domicile-
Citi codeRZ93
Schroder Income Maximiser L Acc
Initial charge-
Annual charge0.68%
Min single investment£0
Min regular saving£0
Available in ISAYes
Ongoing charge (OCF)0.84%
Total expense ratio (TER)-
Bid price66.44
Offer price66.78
Mid price-
CurrencyGBX
Price updated20/02/2018
TypeAccumulation
Institutional or retail classRetail
Domicile-
Citi codeJOVN
Schroder Income Maximiser L Inc
Initial charge-
Annual charge0.68%
Min single investment£0
Min regular saving£0
Available in ISAYes
Ongoing charge (OCF)0.84%
Total expense ratio (TER)-
Bid price49.2
Offer price49.45
Mid price-
CurrencyGBX
Price updated20/02/2018
TypeIncome
Institutional or retail classRetail
Domicile-
Citi codeJOVO
Schroder Income Maximiser Z Acc
Initial charge-
Annual charge0.75%
Min single investment£1,000,000
Min regular saving£100,000
Available in ISANo
Ongoing charge (OCF)0.91%
Total expense ratio (TER)-
Bid price85.05
Offer price85.48
Mid price-
CurrencyGBX
Price updated20/02/2018
TypeAccumulation
Institutional or retail classRetail
Domicile-
Citi codeNND1
Schroder Income Maximiser Z Inc
Initial charge-
Annual charge0.75%
Min single investment£1,000,000
Min regular saving£100,000
Available in ISANo
Ongoing charge (OCF)0.91%
Total expense ratio (TER)-
Bid price53.32
Offer price53.59
Mid price-
CurrencyGBX
Price updated20/02/2018
TypeIncome
Institutional or retail classRetail
Domicile-
Citi codeNND2
Data provided by

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