Schroder multi-manager turns hot on CTAs
Schroder multi manager is looking to add a Ucits III compliant commodity trading advisor (CTA) strategy to its alternatives range to generate uncorrelated returns in a tricky investment climate.
According to Jane Turner, fund selector on Schroders’ multi asset team, alternative strategies are increasingly attractive as they reduce correlation to other risk assets in the portfolio.
Real estate, private equity and hedge funds are all potential areas to invest in alternatives, but Turner is not convinced by private equity due to a recent recovery in prices. Schroder multi-manager has also reduced its exposure to property this year.
The Schroder Multi-manager Cautious Managed Fund began allocating to its first alternatives fund (Dalton Strategic Partnership’s Melchior European Absolute Return Fund) this year. This Ucits III European equity long/short fund combines a fundamental approach to stock selection with an active trading overlay.
Turner described the Melchior fund as a “good diversifier” for the multi-manager portfolio having returned roughly 6% since selected. The Cautious Managed Fund is down 2.6% year to date, 0.4% below the IMA cautious managed sector average.
Turner is keen on bringing another absolute return Ucits III product running a CTA strategy into the cautious managed range provided it offers weekly or bimonthly liquidity.
CTA funds have picked up attention this year from a variety of fund selectors. Last month Morten Spenner of fund of hedge funds IAM also backed the strategy.
In October Man Group’s head of its multi-manager division Luke Ellis agreed CTAs stood out during the summer’s volatility.
The Schroder multi-manager team will consider boutique fund managers and has no bias regarding large or small fund houses, Turner said.
However, she added that there can be boutique risks, citing Schroders’ decision to cut its 5.7% exposure to the Dublin-based Occam Asia Focus fund prior to its acquisition by Liontrust in August. This was an example of “boutique-related issues” causing the fund to “struggle gaining traction as a business and struggle with performance,” she explained.