Fund house Schroders has expanded its Maximiser portfolio range with the launch of a large capitalisation US equity income fund.
The fund, called the Schroder US Equity Income Maximiser Fund, targets an annualised return of 5 per cent, paid quarterly, through investment in some of the largest companies across the Atlantic.
It aims to provide an exposure similar to that of the largest US companies weighted by market capitalisation, according to the investment firm.
As with other funds in the Maximiser range, the portfolio will add a covered call option overlay, where an investor holds a long position in an asset and sells call options on that same asset, to enhance the yield, it added.
The fund will managed by Mike Hodgson, head of risk managed investments and structuring, who has nearly 30 years of industry experience. He will be supported by Schroders’ risk managed investments team.
The investment product commands an ongoing charge figure of 0.5 per cent.
Last year, Thomas See, the architect of Schroders’ Income Maximiser range, left the company following its decision to merge its structured fund management team – which is responsible for the Maximiser franchise – with the portfolio solutions team.
The combined teams now report to Mr Hodgson following the move, but the investment philosophy, process and management of the Maximiser funds remain unchanged.
Provider view
James Rainbow, co-head of UK intermediary at Schroders, said: “Schroders’ Maximiser strategy has a proven track record in enhancing equity yield in all market conditions.
“This is the first time the Maximiser strategy has invested solely in the US market and we are excited to be offering an attractive solution for investors who not only want to invest in large US companies, but also require a higher income from their investments. For example, the Maximiser strategy enables us to include those tech stocks which are currently paying little or nothing in the way of dividends and generate this income from them.
“We have been managing similar strategies covering the UK and international equity markets since 2005 giving us many years of experience and expertise in delivering this income while still providing capital growth potential.”
Adviser view
Commenting on the 5 per cent return target, Dennis Hall, chartered financial planner at London-based Yellowtail Financial Planning, said: “If that is all they are looking to deliver from a large cap US equity fund, I would buy the market because I think I would get greater return by investing in an equivalent tracker at a cheaper price. I can’t see where they are adding value with an ongoing charge of 0.5 per cent.”
He added: “I have read views that the US equity market is overvalued and I have read views stating the opposite. It has been proven in the past that you can’t successfully time the market.”
Charges
Ongoing charges of 0.5 per cent
Verdict
If you subscribe to the sentiment that active management cannot add much value in less volatile markets, then you are likely to broach this fund with caution. The US market has experienced solid performance in times of late. Notably, in the closing months of last year, trackers of US equity indices would have experienced bumper performance thanks to a rally in oil prices.
