Schroder Income Maximiser Z Accumulation GBP
UK Equity Income
Rated Fund 2013-17, 2019. Supercharged income provider
Schroder Income Maximiser returns to our Rated Funds in 2019, following a one-year hiatus. Premier Optimum Income took its place in 2018, but in hindsight this was a mistake, so we have reversed the change this year.
The Schroders fund has a slightly lower yield than the Premier fund, but it has markedly outperformed in total return terms. It has outperformed its sector and benchmark, at times significantly so, over one, three, five and 10 years.
Launched in 2005, the fund is designed for investors who need more income than a conventional UK equity income fund can provide. Its target yield is 7%. This is not guaranteed, but the fund has hit its income target in every year that it has existed.
This has been achieved through a two-stage process of investing in stocks and then selling call options on them. The underlying investment portfolio of 40 shares, managed by Nick Kirrage and Kevin Murphy, generates a yield of around 4.5%. The ‘overlay’ strategy of selling options to boost the yield is run by Mike Hodgson.
Kirrage and Murphy describe themselves as value investors who take advantage of price weakness to invest in strong, yet undervalued companies. The companies they choose are also those they believe have the greatest potential for dividend and capital growth.
Hodgson aims to apply the option strategy in an active and flexible manner. He looks to generate just enough premia to deliver the yield the fund targets. Some capital growth potential 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.
Narrative and ratings content all as of 01 January 2019.See all Money Observer rated funds
|BP PLC||5.42 %|
|GlaxoSmithKline PLC||5.30 %|
|HSBC Holdings PLC||4.81 %|
|Pearson PLC||4.71 %|
|Centrica PLC||4.62 %|
|Anglo American PLC||4.44 %|
|South32 Ltd||4.15 %|
|Morrison (Wm) Supermarkets PLC||4.07 %|
|The Royal Bank of Scotland Group PLC||3.80 %|
|Aviva PLC||3.55 %|
|United Kingdom||85.38 %|
|United States||6.00 %|
|Financial Services||30.26 %|
|Basic materials||12.21 %|
|Consumer Cyclical||11.69 %|
|Consumer Defensive||9.02 %|
Mike Hodgson is Head of Risk Managed Investments and Structuring at Schroders, which involves, in the case of RMI, the management of outcome-oriented growth strategies. Usually this involves modifying the distribution of outcomes, often through the use of derivatives. Structuring involves the design of RMI strategies, and the design and execution of OTC derivatives. He joined Schroders in 2011 and is based in London. Mike was Head of Fund Derivatives Structuring and Trading at ABN AMRO Bank NV from 2006 to 2010, which involved designing, executing and hedging products and solutions that provide an exposure to funds. He was Head of Global Equity Derivatives Structuring at ABN AMRO Bank NV from 2004 to 2006, which involved designing products and solutions that provide an exposure to equities. He was Head of Structured Products and Equity Derivatives at J Henry Schroder & Co. Limited from 1996 to 2000, which involved designing, executing and hedging products and solutions across all asset classes. He was also responsible for equity and fund derivatives trading. When JHS was acquired by Citigroup in 2000, Mike became Head of New Product Development. He was an Interest Rate Derivatives Trader at J Henry Schroder & Co Limited from 1987 to 1992, which involved making markets in and trading and hedging interest rate swaps, swaptions, caps and floors. In 1992, Mike moved to JHS's Structured Products team (which he later led) expanding into derivative instruments across all asset classes. Mike owns US patents in relation to certain financial instruments that enable market participants to trade and hedge volatility exposure Qualifications: PhD in Physics from Cambridge University; BSc in Physics from Imperial College, London.
Nicholas Kirrage is a Co-head of the Global Value Team at Schroders, and a founding member in 2013 of this team of value investors who manage UK, European and global portfolios . He is co-manager of the Schroder UK Income, Schroder UK Recovery and Global Recovery funds. He joined Schroders in 2001 and is based in London. Nicholas was a Fund Manager and Analyst at Schroders from 2001 to 2013, commencing his career in the Pan European research team with responsibility for Transport, Metals & Mining and Aerospace and Defence sectors. He became a co-fund manager in 2006 of the Schroder Recovery Fund and in 2010 of the Schroder Income Fund. Qualifications: CFA Charterholder; Meng in Aeronautical Engineering from Bristol University.
Kevin Murphy is a Co-head of the Global Value Team at Schroders, and a founding member in 2013 of this team of value investors who manage UK, European and global portfolios. He is co-manager of the Schroder UK Income, Schroder UK Recovery and Global Recovery funds. He joined Schroders in 2000 and is based in London. Kevin was a Fund Manager and Analyst at Schroders from 2000 to 2013, commencing his career in the UK equity fund management team before taking responsibility for the Pan European Construction and Building Materials sectors. He became co-manager of the Schroder Recovery Rund in 2006 and the Schroder Income Fund in 2010. Qualifications: CFA Charterholder; BSc in Economics from Manchester University.
Data provided by Morningstar.
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