Schroder Income Maximiser Z Accumulation GBP
UK Equity Income
Rated Fund 2013-17, 2019-20. Supercharges income by selling call options
Schroder Income Maximiser returned to our Rated Funds in 2019 following a one-year hiatus. The fund is designed for investors who need more income than a conventional UK equity income fund can provide. It aims to deliver an income of 7% per year, and though not guaranteed it has achieved this every year since launch in 2005.
The income is achieved through a two-stage process of investing in stocks and then selling call options on them. The underlying investment portfolio of around 40 company shares generates a yield of 5.4% and 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, taking 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 premiums to deliver the yield that the fund targets.
Broker Willis Owen regards this as a unique strategy that is suitable for investors looking to boost the natural income from their portfolio. "While this comes at some loss of capital, the Schroders team has proven to be very successful in using derivatives to deliver the extra income while protecting capital," says Adrian Lowcock, head of personal investing.
Narrative and ratings content all as of January 2020.See all Money Observer rated funds
|BP PLC||5.25 %|
|Anglo American PLC||4.96 %|
|Standard Chartered PLC||4.40 %|
|The Royal Bank of Scotland Group PLC||4.22 %|
|Pearson PLC||4.02 %|
|Morrison (Wm) Supermarkets PLC||3.88 %|
|GlaxoSmithKline PLC||3.78 %|
|Aviva PLC||3.73 %|
|Tesco PLC||3.73 %|
|HSBC Holdings PLC||3.68 %|
|United Kingdom||88.40 %|
|Financial Services||29.96 %|
|Consumer Defensive||11.98 %|
|Communication Services||11.75 %|
|Basic materials||11.59 %|
|Consumer Cyclical||6.25 %|
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.
Nick joined Schroders in 2001, initially working as part of the Pan European research team providing insight and analysis on a broad range of sectors from Transport and Aerospace to Mining and Chemicals. In 2006, Nick and Kevin Murphy took over management of a fund that seeks to identify and exploit deeply out of favour investment opportunities. In 2010, Nick and Kevin Murphy also took over management of the team's flagship UK value fund seeking to offer income and capital growth. 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.
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