Schroder Managed Balanced - treading carefully
Jonathon Curtis | Fri 15 February 2019
The links in this article will take you to Hargreaves Lansdown’s main website for more information. Please be aware that if you wish to join any of the benefits in your company Plan you must return to this website to apply.
- Manager Johanna Kyrklund invests the fund conservatively
- It's done well over the long term but performance has come off the boil recently
- UK investments have been reduced but still make up a significant portion of the fund
Our view
We think diversification is the cornerstone of a successful investment portfolio. A broad mix of investments gives a portfolio the potential to benefit in many different market environments. We don’t expect everything to perform well at the same time. But it should mean it’ll always have some investments in the areas that are doing well.
Building a balanced portfolio, which combines a range of different investment approaches and asset types, is easier said than done though. As is keeping an eye on it, making ongoing decisions and changing investments as needed.
We think Schroder Managed Balanced does all the hard work. Manager Johanna Kyrklund mainly invests in a selection of Schroders' own funds, tapping into the expertise of several experienced managers. It’s an entire portfolio in a single investment. We think she’s done a good job of growing the fund over the long term, while avoiding some of the risks of investing more adventurously.
We like the fund’s combination of low cost and convenience. Johanna Kyrklund is an experienced and highly capable manager and we think her team is one of the best-resourced in the UK. That’s why the fund features on the Wealth 50 list of our favourite funds.
How's the fund performed?
Kyrklund’s grown the fund 62.2%* since she took over in February 2011. The fund’s benchmark, the IA Mixed Investment 40-85% Shares index, grew 54.3%. We think this is a great result given the manager takes a more conservative approach than many of her peers. Past performance isn’t a guide to the future though. All funds can fall as well as rise in value so you could get back less than you invest.
2018 was a volatile year for global stock markets. The fund ended the 12 months to 31 January 2019 down 4.7%, which was more than the benchmark’s 3.3% drop.
Schroder Manager Balanced performance during Johanna Kyrklund's tenure
Past performance is not a guide to the future. Source: Lipper IM* 31/1/2019
| Annual percentage growth | |||||
|---|---|---|---|---|---|
| Jan 14 -
Jan 15 |
Jan 15 -
Jan 16 |
Jan 16 -
Jan 17 |
Jan 17 -
Jan 18 |
Jan 18 -
Jan 19 |
|
| Schroder Managed Balanced | 10.2% | -5.8% | 21.6% | 10.8% | -4.7% |
| IA Mixed Investment 40-85% Shares | 9.3% | -3.6% | 18.4% | 9.6% | -3.3% |
Past performance is not a guide to the future. Source: Lipper IM 31/1/2019
How does the manager invest?
Kyrklund invests in a mix of funds investing in shares and bonds across the globe. Shares have higher long-term growth potential, but can be more volatile in the short term. Bonds help to smooth the fund's returns and add diversification. She currently invests roughly two-thirds of the fund in shares and a third in bonds. This is slightly less than she’d invested in shares 12 months ago. That’s because she thinks global growth’s slowing, which could impact some companies.
Kyrklund adjusts how much she invests in different countries depending on how she views their prospects. At the moment Kyrklund invests most in the UK. But recently she’s been reducing UK investments because of Brexit uncertainty. If there’s a bad Brexit, she thinks it’ll affect European growth too, so she’s considering the potential impact on both sides of the Channel.
US investments also make up a big part of the fund. Kyrklund thinks the US is one of few places with significant growth potential left so she’s increased investments there. She made a new investment in the Schroder ISF US Large Cap fund, which invests in big US firms. They’ve driven much of the global stock market's growth in recent years.
She also added the Schroder ISF China A-Share Fund to the portfolio. The country recently allowed foreigners to invest in Chinese companies and Kyrklund doesn’t want to miss out on the impact they have on the global stock market.
The manager's got the flexibility to invest in high-yield bonds and derivatives which, if used, adds risk.
Find out more about Schroder Managed Balanced including charges