The Schroder Income Maximiser has certainly lived up to its name. Since its launch in November 2005, it has managed to successfully exceed its 7 per cent a year yield target each year.
One driver of this performance has been the 'covered call' overlay which acts as the income "maximiser" - it's proved so popular that Schroders has rolled out both an Asian Maximiser and a Property Maximiser fund. It works like this: the manager may selectively choose to sell short-dated call options over securities or portfolios of securities held by the fund in order to generate additional income, by setting target 'strike' prices at which securities may be be sold in future.
The fund benefits from quarterly income payments and has managed to post top-quartile performance over both three and five years. While the long-term outperformance of the fund can largely be credited to skills of its former managers - Nick Purves and Ian Lance, who left Schroders last year to join RWC Partners - the fund seems to have found a safe set of hands in Nick Kirrage and Kevin Murphy. The two also manage the Schroder Recovery fund, which has significant overlap with the Income Maximiser Fund.
Thomas See has continued to look after the derivative overlay strategy for the fund. He notes that persistent volatility in equity markets has been to the fund's advantage, maintaining industry demand for covered call options. "This leaves us confident that the fund's yield strategy is durable with the 7 per cent income target offering a compelling proposition given that interest rates are likely to stay lower for longer."
SCHRODERS INCOME MAXIMISER A ACC (SZIM) | |||
---|---|---|---|
PRICE | 66.57p | SHARPE RATIO | 0.13 |
SIZE OF FUND | £758.3m | 1-YEAR PERFORMANCE | 16.14% |
No OF HOLDINGS | 43 | 3-YEAR PERFORMANCE | 27.60% |
SET UP DATE | 7 November 2005 | 5-YEAR PERFORMANCE | 33.73% |
MANAGER START DATE | 30 April 2009 | TOTAL EXPENSE RATIO | 1.66% |
BETA | 0.76 | YIELD | 7.72%* |
VOLATILITY | 1.94 | MINIMUM INVESTMENT | £1,000 minimum investment |
TRACKING ERROR | 1.23 | MORE DETAILS | schroders.co.uk |
Source: Investors Chronicle funds data, Schroders, Morningstar*
Performance figures as at 11 February 2011
Top 10 holdings as at December 2010
Holding | Percentage |
---|---|
Vodafone | 6.4 |
Lloyds Banking | 6.1 |
AstraZeneca | 5.3 |
Barclays | 4.6 |
RSA Insurance | 4.4 |
GlaxoSmithKline | 4.4 |
Logica | 4.0 |
Merck | 4.0 |
Pfizer | 3.9 |
Legal&General | 3.9 |
Sector Breakdown
Sector | Percentage |
---|---|
Financials | 33.3 |
Healthcare | 17.7 |
Consumer Services | 16.8 |
Telecommunications | 12.6 |
Oil & Gas | 7.0 |
Industrials | 5.8 |
Technology | 4.0 |
Consumer Goods | 2.8 |