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Citywire event presentation oct 13 final updated

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  • 1. Investing in equities for income in a low return world Schroder ISF* Global Dividend Maximiser Schroder ISF European Dividend Maximiser Schroder ISF Asian Dividend Maximiser Thomas See, Head of Structured Fund Management October 2013 | For professional investors or advisors only *Schroder International Selection Fund is referred to as Schroder ISF throughout this presentation
  • 2. Schroders’ Maximiser fund range Tested approach to generating income – range started in 2005 Three UK AUTs 31/08/13 Schroder Income Maximiser Equity income portfolio investing predominantly in UK equities with covered call overlay Schroder Asian Income Maximiser Equity income portfolio investing in Asia (ex Japan) with covered call overlay Schroder Global Property Income Maximiser Globally diversified portfolio of property securities with covered call overlay $1,550.3m $324.3m $140.1m Two SICAV funds Schroder ISF European Dividend Maximiser European equity income portfolio (EUR denominated) with covered call overlay $479.8m Schroder ISF Global Dividend Maximiser Global equity income portfolio (USD denominated) with covered call overlay $792.1m Schroder ISF Asian Dividend Maximiser Equity income portfolio investing in Asia (ex Japan) with covered call overlay Recently launched Two segregated mandates for wholesale distribution Segregated mandates Global REIT portfolio with covered call overlay $298.8m European equity portfolio with covered call overlay $261.8m Multi-asset income fund with a monthly distribution (new) Schroder Managed Monthly High Income Fund of funds investing 50% in Maximiser funds, 50% in fixed income funds $16.6m USD3.9bn invested in Maximiser strategies Source: Schroders, All AuM as at 31 August 2013 Schroders' Maximiser range of funds | October 2013 1
  • 3. Schroders’ Maximiser two-step strategy Distinctive, high yield funds with an attractive proposition and investor appeal 7% (Asian) 8% (Global, European) target yield 1 Step 1 Dividends from an actively managed equity income portfolio c. 4.0%1 p.a. Step 2 + Premium from selling covered call options2 c.4.0%1 p.a. Two layers of fund management, but only one layer of fees 1 The gross target yield quoted is an estimate and is not guaranteed. Schroder ISF Asian Dividend Maximiser applies the same two-step approach but targets 7% p.a. 2 Only some upside is sold, in order to preserve the potential for capital growth over the option term Schroders' Maximiser range of funds | October 2013 2
  • 4. Financial repression – cash is no longer ‘risk free’ A tax on savers and investors to subsidise public debt and economic recovery? Schroders’ interest rate forecast End 2013 End 2014 How long ? EUR 0.50% since May 2013 0.50% 0.50% USD 0.25% since Dec 2008 0.25% 0.25% > 2015 ? GBP 0.50% since Mar 2009 0.50% 0.50% > 2016 ? With negative returns after tax and inflation, is cash safe? Will inflation spike? Path of least resistance to the fiscal debt problem? Interest rates may stay low for more years than many think Source: Schroders, forecasts for interest rates as at 30 September 2013 Forecast risk warning: Please refer to the important information slide at the end of this presentation Schroders' Maximiser range of funds | October 2013 3
  • 5. Official policy is to depress short and long-term yield For risk averse investors, there are fewer opportunities (%) 16 14 12 10 quantitative easing 8 6 4 Schroders Global CPI Target 2014 2 loss making after inflation Germany UK 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 0 US Source: Datastream., as at 30 September 2013, 10 year government bonds. Forecast risk warning: Please refer to the important information slide at the end of the presentation Schroders' Maximiser range of funds | October 2013 4
  • 6. Bond yields are compressed across the quality spectrum Hunt for yield is driving-up risk appetite Not many fixed income securities across the globe offer yields above low single digits at the moment Global 10-year government bond yields Corporate bond yields 20% Global High Yield BB* Global Large Cap BBB* 15% 10% 5.36% 3.75% Corporate A** 9.5% 7.0% 4.77% Corporate AA** 4.61% 4.3% 5% 2.7% 2.6% 2.20% Global Large Cap AA* 1.8% 0.7% 0% 2.62% Ja pa n Ge rm an y US UK Sp ain Po rtu ga l Gr ee ce Global Large Cap AAA* 0% 2% 4% 6% 8% Source: Thomson Datastream & Bloomberg. As at 30 September 2013, *BofAML, **Moodys Schroders' Maximiser range of funds | October 2013 5
  • 7. Emerging market bond yields Persistent cheap money has reduced returns everywhere Yield % 90 Highest Yield 80 70 60 50 40 30 20 10 Local Currency Bond Nigeria Argentina South Africa Venezuela Ecuador Brazil Russia Turkey Indonesia India Hungary Mexico Poland Ukraine Colombia Malaysia Indonesia Turkey Brazil Peru Panama Mexico Philippines Colombia Malaysia South Africa Russia Poland Thailand China Chile Broad Bulgaria USD Bond Peru Lowest Yield 0 Last Yield Source: Schroders; Bloomberg; JP Morgan – Covering period 1992 to 30 August 2013 Schroders' Maximiser range of funds | October 2013 6
  • 8. Equities still yielding near the 10yr average Cheap money and the hunt for yield is working its way across the asset classes Current yield versus 10-year average (%) 6 Equities Corporate bonds Government bonds Money markets 5 4 3 2 1 0 European div yield US div yield Asian div yield A € corp bond yield (10y) A $ corp bond yield (10y) German 10 yr Bund yield US 10yr bond yield German 3m rates (EUR Libor) US 3m rates (USD Libor) Source: UBS, Bloomberg, MSCI. As at 26 June 2013 Schroders' Maximiser range of funds | October 2013 7
  • 9. Market context High-dividend-yield stocks compared to high-yield bonds
  • 10. Investors paying a premium for the safety of credit assets The yield pickup of high-yield credit is close to record lows Yield of high-yield corporate credit vs. dividend yield of ‘quality’ high-yield stocks Yield gap (%) 18% 16% 14% 12% 10% 8% 6% 4% 2% Dec-12 Dec-11 Dec-10 Dec-09 Dec-08 Dec-07 Dec-06 Dec-05 Dec-04 Dec-03 Dec-02 Dec-01 Dec-00 Dec-99 Dec-98 Dec-97 Dec-96 Dec-95 Dec-94 Dec-93 Dec-92 Dec-91 Dec-90 0% Source: Bloomberg, Societe Generale, Schroder analysis. As at 30 September 2013. High-yield corporate credit is represented by the Merrill Lynch HY USD Corporate Bond Index. High-yielding stocks are represented by the Societe Generale Global Quality Income Index, which is available on Bloomberg as SGQINTR Index Schroders' Maximiser range of funds | October 2013 9
  • 11. Investors paying a premium for the safety of credit assets Despite cyclical low default rates Default rate of high-yield corporate credit Default rate (%) 16% 14% 12% 10% 8% 6% 4% 2% Dec-12 Dec-11 Dec-10 Dec-09 Dec-08 Dec-07 Dec-06 Dec-05 Dec-04 Dec-03 Dec-02 Dec-01 Dec-00 Dec-99 Dec-98 Dec-97 Dec-96 Dec-95 Dec-94 Dec-93 Dec-92 Dec-91 Dec-90 0% Source: Bloomberg, Societe Generale, Schroder analysis. As at 31 August 2013. High-yield corporate credit is represented by the Merrill Lynch HY USD Corporate Bond Index High-yielding stocks are represented by the Societe Generale Global Quality Income Index, which is available on Bloomberg as SGQINTR Index Schroders' Maximiser range of funds | October 2013 10
  • 12. Which investment has the better balance sheet? Very different asset backing 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% Merrill Lynch Euro High Yield 3% Issuer Constrained NR/Other C/C CC/Ca CCC-/Caa3 CCC/Caa2 CCC+/Caa1 B-/B3 B/B2 B+/B1 BB-/Ba3 BB/Ba2 BB+/Ba1 BBB-/Baa3 BBB/Baa2 BBB+/Baa1 A-/A3 A/A2 A+/A1 AA-/Aa3 AA/Aa2 AA+/Aa1 AAA/Aaa 0.0% Schroder ISF Global Dividend Maximiser Source: Bloomberg, Societe Generale, Schroder analysis, as at 17 September 2013. Bond rating defined as average of Moodys, S&P and Fitch Schroders' Maximiser range of funds | October 2013 11
  • 13. Dividend income is resilient Management teams avoid cutting dividends Dividend cuts vs. earnings cuts in five European recessions 0% 1970s 1980s 1990s TMT 2009 -10% -20% -30% -40% -50% -60% Fall in Earnings Dividend cuts Dividend cuts ex financials Source: UBS. MSCI Europe dividend paid. As at 31 December 2011 Schroders' Maximiser range of funds | October 2013 12
  • 14. Why invest for yield? To generate total returns!
  • 15. High-yielding stocks out-perform Long-term evidence from the UK Cumulative value (log scale) Based on UK equity market. Source: Elroy Dimson, Paul Marsh and Mike Staunton, Triumph of the Optimists, Princeton University Press, 2002, and updates by the authors in 2012. Schroders' Maximiser range of funds | October 2013 14
  • 16. High-yielding stocks out-perform Long-term evidence from Europe 1,800 1,600 1,400 1,242 11.6%* 1,200 1,000 800 814 9.5%* 600 630 525 8.3%* 7.5%* 271 196 4.4%* 3.0%* 400 200 Q1 Q2 Q3 Q4 Q5 Dec-12 Mar-12 Jun-11 Sep-10 Dec-09 Mar-09 Jun-08 Sep-07 Dec-06 Mar-06 Jun-05 Sep-04 Dec-03 Mar-03 Jun-02 Sep-01 Dec-00 Mar-00 Jun-99 Sep-98 Dec-97 Mar-97 Jun-96 Sep-95 Dec-94 Mar-94 Jun-93 Sep-92 Dec-91 Mar-91 Jun-90 0 Universe * Figures show the CAGR. Source: Factset. Schroder analysis. Data taken from constituents of FTSE World Europe and S&P Europe as at 30 June 2013. The data shows relative performance of the different yield quintiles of European stocks since 1989. Note that trading costs are not considered Schroders' Maximiser range of funds | October 2013 15
  • 17. Equity investment philosophy Improving total returns by focussing on income We believe: High-yielding stocks out-perform, long-term; Focussing on the drivers of dividends, allows us to identify undervalued businesses; High-yield equity strategies can outperform in different market environments. We are not bearmarket investors. We aim: To outperform the MSCI benchmark index by 300 basis points per annum, gross of fees over a 3-year rolling period; To deliver gross dividend income 100 basis points above the index. Schroders' Maximiser range of funds | October 2013 16
  • 18. We are honest to our beliefs Diversification within the yield universe Schroder ISF European Dividend Maximiser fund weight by European market yield quintile (trailing 12 months) 1 2 3 4 5 50% 46% 45% 40% 34% 35% 30% 80% of the Schroder ISF European Dividend Maximiser is invested in the highest two quintiles of dividend yield The Schroder ISF Global Dividend Maximiser invests 87% in the highest two quintiles of dividend yield 25% 20% 16% 15% Lower yielding stocks are held for their dividend growth and total return potential 10% 3% 2% 5% 0% 4.7% 3.2% 2.2% 1.0% 0.0% Lowest trailing dividend yield within each quintile We will never own a stock without medium-term dividend potential; this means a potential yield of ~5% within 3-5 years. Source: Bloomberg. Schroder analysis. European universe: European stocks over EUR 500m market capitalisation. As at 07 October 2013. Weights exclude cash holdings. Schroders' Maximiser range of funds | October 2013 17
  • 19. Diversification within the yield universe High-dividend indices tend to be sector-concentrated MSCI Europe High Yield Index sector exposure % 0.6 Schroder ISF European Dividend Maximiser sector exposure % 9.7 13.3 23.8 21.7 16.4 12.2 3.5 8.4 8.2 13.0 14.3 5.9 2.2 7.6 4.6 12.7 Financials Telecommunication Services Industrials Consumer Discretionary Health Care 13.9 8.1 Utilities Consumer Staples Materials Energy Information Technology Source: Thomson Reuters Datastream, Schroders. MSCI Europe High Yield data as at 30 September 2013. Schroder ISF European Dividend Maximiser data as at 30 September 2013. Schroders' Maximiser range of funds | October 2013 18
  • 20. Diversification does not mean passivity Sector exposure driven by fundamental valuation opportunities Relative sector exposure (%)* Sector exposure (%) 7.0% Telecoms 21.7 2.1% Industrials 12.2 0.9% Health Care 3.5 0.0% Financials 8.4 -0.5% Utilities -0.9% Consumer Disc 13.0 5.9 -2.2% Materials 13.9 8.1 -3.3% Info Tech Consumer Staples 13.3 2.8% Energy -5.8% -10% -5% 0% Over/Underweight 5% 10% Financials Telecoms Industrials Consumer Discretionary Health Care Utilities Consumer Staples Materials Energy Information Technology Source: Schroders. Data shown for Schroder ISF European Dividend Maximiser. As at 30 September 2013, ex cash, ex options. *Relative to MSCI Europe. Schroders' Maximiser range of funds | October 2013 19
  • 21. We are not bear-market investors The underlying equity book has out-performed in rising markets Relative monthly performance of Schroder ISF European Equity Yield versus MSCI Europe 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% Nov-10 Feb-11 May-11 Aug-11 Nov-11 Feb-12 May-12 Aug-12 Nov-12 Feb-13 May-13 Aug-13 = rising market Source: Morningstar. Performance data is based on ‘A’ class shares, bid to bid, net of fees from the 30 November 2010 – 30 September 2013. *Ian Kelly took over portfolio management responsibilities for the fund on the 01/11/2010. Schroders' Maximiser range of funds | October 2013 20
  • 22. Performance versus peers Schroder ISF European Dividend Maximiser & Schroder ISF European Equity Yield Periods to 30 September 2013 Performance versus index in € % 1 year 2 years p.a. 3 years p.a. 5 years p.a. Income Paid* Schroder ISF European Dividend Maximiser, A Acc +16.2 +21.2 +10.3 +6.8 8.0% MSCI Europe Net TR +18.1 +20.2 +9.0 +6.8 Schroder ISF European Equity Yield, A Acc +20.6 +23.1 +11.4 +7.6 4.0% Ranking versus income peers* 1 year 2 years p.a. 3 years p.a. 5 years p.a Income Paid* Schroder ISF European Dividend Maximiser, A Acc 20 / 29 5 / 25 5 / 19 6 / 16 8.0% Schroder ISF European Equity Yield, A Acc 3 / 29 4 / 25 3 / 19 4 / 16 4.0% Source: Morningstar. Performance is based on bid to bid, net of fees. The broad peer group rankings are based on ‘A’ shares and are a combination of ‘Europe Equity Income’ ‘Europe Large Cap Blend’, ‘Europe Large Cap Growth’ and ‘Europe Large Cap Value’ funds, domiciled in Luxembourg. *The income peer group rankings are based on ‘A’ class shares and consist of ‘Europe Equity Income’ funds.*Income paid on distribution share class Schroders' Maximiser range of funds | October 2013 21
  • 23. Performance versus peers Schroder ISF Global Dividend Maximiser and Schroder ISF Global Equity Yield Periods to 30 September 2013 Performance versus index in US$ % 1 year 2 years p.a. 3 years p.a. 5 years p.a. Income Paid* Schroder ISF Global Dividend Maximiser, A Acc +10.1 +16.9 +9.2 +6.3 8.0% MSCI World Net TR +20.2 +20.9 +11.8 +7.8 Schroder ISF Global Equity Yield, A Acc +11.6 +17.6 +9.7 +7.5 4.0% Ranking versus Income peers* 1 year 2 years p.a. 3 years p.a. 5 years p.a. Income paid* Schroder ISF Global Dividend Maximiser, A Acc 44 / 52 17 / 43 12 / 31 12 / 26 8.0% Schroder ISF Global Equity Yield, A Acc 40 / 52 11 / 43 9 / 31 9 / 26 4.0% Source: Morningstar. Performance is based on bid to bid, net of fees in USD. The broad peer group rankings are based on ‘A’ class shares, Global Equity; Offshore and International Funds. *The income peer group rankings are based on ‘A’ class shares and consist of ‘Global Equity Income’ funds *Income paid on distribution share class Schroders' Maximiser range of funds | October 2013 22
  • 24. Market context - What is the potential in high-yielding stocks? - Is a ‘dividend bubble’ forming?
  • 25. No sign of a bubble in European high-yielding stocks High-yielding stocks still trading at attractive valuations PE ratio of European stocks in top quintile of dividend yield and market median PE 30 25 20 15 10 5 0 1988 1990 1992 1994 Top quintile 1996 1998 Market Median 2000 2002 Top quintile 2004 2006 2008 2010 2012 Market Average Source: Factset, Societe Generale, Schroder analysis. As at 30 September 2013. Universe is constituents of FTSE World Europe Index Stocks are separated into quintiles based on 12-month trailing dividend yield. PE ratio is based on trailing earnings Schroders' Maximiser range of funds | October 2013 24
  • 26. A dividend bubble might be emerging in the US High-yielded stocks have lost their P/E discount against the broader market PE ratio of US stocks in top quintile of dividend yield and market median PE 35 30 25 20 15 10 5 0 1988 1990 1992 1994 Top quintile 1996 1998 Market Median 2000 2002 Top quintile 2004 2006 2008 2010 2012 Market Average Source: Factset, Societe Generale, Schroder analysis. As at 30 September 2013. Universe is constituents of FTSE United States Index Stocks are separated into quintiles based on 12-month trailing dividend yield. PE ratio is based on trailing earnings Schroders' Maximiser range of funds | October 2013 25
  • 27. Asian high-yielding stocks still at a discount Higher growth reflected in higher valuations PE ratio of Asia Pac ex Japan stocks in top quintile of dividend yield and market median PE 30 25 20 15 10 5 0 1988 1990 1992 1994 Top quintile 1996 1998 Market Median 2000 2002 Top quintile 2004 2006 2008 2010 2012 Market Average Source: Factset, Societe Generale, Schroder analysis. As at 30 September 2013. Universe is constituents of FTSE Asia Pacific ex Japan Index Stocks are separated into quintiles based on 12-month trailing dividend yield. PE ratio is based on trailing earnings Schroders' Maximiser range of funds | October 2013 26
  • 28. Why have US investors driven valuations so high? US income investors are limited to a small universe Fraction of regional market capitalisation with a trailing dividend yield above 4% 80 70 60 50 40 30 20 10 UK US Japan Europe ex UK Jun-13 Dec-12 Jun-12 Dec-11 Jun-11 Dec-10 Jun-10 Dec-09 Jun-09 Dec-08 Jun-08 Dec-07 Jun-07 Dec-06 Jun-06 Dec-05 Jun-05 Dec-04 0 Asia ex Japan Source: Societe Generale, 30 August 2013. Schroders' Maximiser range of funds | October 2013 27
  • 29. Broad equities look very attractive Attractive total return potential, as well as income Graham & Dodd P/E MSCI Europe MSCI Europe 1 year average returns by starting G&D PE range 1980–2010 PE x 50 25 45 20 40 15 35 30 10 25 5 20 0 15 -5 10 -10 MSCI Europe S&P500 2013 2011 2009 2007 2005 2003 2001 1999 1997 1995 1993 1991 1989 1987 1985 1983 5 10–15 15–20 20–25 25–30 30–35 MSCI Asia-Pac ex Japan Source: Thomson Datastream, UBS. Data until 19 August 2013 Schroders' Maximiser range of funds | October 2013 28
  • 30. Fundamental valuation drives our regional allocation We focus where there is greatest opportunity Relative regional exposure (%)* Europe ex UK Regional exposure (%) 4.9 25.3% Emerging Markets 4.6 3.3% UK 3.5 2.4% Asia/Pacific ex Japan 31.5 11.7 -0.7% 43.8 -4.2% Japan North America -21.9% North America -40% -30% -20% -10% 0% 10% 20% 30% Over/Underweight Europe ex UK UK Asia Pacific ex Japan Japan Emerging Markets Source: Schroders. Data shown for Schroder ISF Global Dividend Maximiser. As at 30 September 2013, ex cash, ex options. *Relative to MSCI World Schroders' Maximiser range of funds | October 2013 29
  • 31. Overweight European listings, not European growth Top 20 holdings: Schroder ISF Global Dividend Maximiser Top 20 holdings Characteristics of top 20 Weight (%) Analyst Grading FY1 P/E Yield (%) Microsoft 3.7 1 12.5 2.7 Legal & General 2.4 2 12.6 4.1 Deutsche Telekom 2.3 N/A 17.3 6.5 Prudential 2.2 2 14.5 2.7 Roche 2.0 2 15.9 3.0 Mitsui & Co 2.0 1 6.6 3.0 JPMorgan Chase & Co 1.9 2 9.1 2.5 Repsol 1.8 2 11.0 5.0 Hugo Boss 1.8 N/A 18.7 3.3 Stock concentration Time Warner Cable 1.8 3 17.5 2.3 Number of holdings 72 Sanofi 1.7 2 13.9 3.7 Top 10 holdings 22% Novartis 1.7 2 14.8 3.3 Top 20 holdings 38% Deutsche Boerse 1.7 N/A 15.4 3.8 Deutsche Post 1.7 N/A 16.0 2.9 CNOOC 1.7 2 8.9 3.6 General Electric 1.7 2 14.5 3.2 Over $20 bn 73% Credit Suisse 1.6 1 11.2 0.4 $10 bn to $20 bn 14% Daimler 1.6 2 11.5 3.8 $5 bn to $10 bn 5% LyondellBasell Industries 1.6 1 12.2 2.5 $1 bn to $5 bn 8% International Paper 1.6 N/A 13.4 2.7 20% Graded 1 50% Graded 2 5% Graded 3 0% Graded 4 25% Not Graded Average P/E 13.4 Average Yield 3.3% Market cap split Source: Schroders/FactSet as at 30/09/13. P/E (FY1) and Yield sourced from FactSet as at 30/09/13. Averages use simple averages Schroders' Maximiser range of funds | October 2013 30
  • 32. High-yielding, international franchises Top 20 Holdings: Schroder ISF European Dividend Maximiser Top 20 holdings Characteristics of top 20 Weight (%) Analyst Grading FY1 P/E Yield (%) Deutsche Telekom 4.7 N/A 17.3 6.5 25% Graded 1 Vodafone 4.7 1 14.2 4.7 35% Graded 2 Roche 4.3 2 16.9 3.0 10% Graded 3 Sanofi 3.8 2 13.9 3.7 Novartis 3.6 2 14.8 3.3 Total 3.4 2 8.6 5.5 BAE Systems 3.3 3 10.6 4.3 Reed Elsevier 3.1 N/A 15.2 3.2 Legal & General 3.1 2 12.6 4.1 Ageas 3.1 N/A 9.7 4.0 Statoil 3.0 1 9.2 5.0 Number of holdings 49 Tesco 2.9 2 11.3 4.1 Top 10 holdings 35% Swedbank 2.7 1 11.8 6.6 Top 20 holdings 61% SNAM 2.6 N/A 13.6 6.7 ENI 2.6 3 11.9 6.4 Market cap split Wolters Kluwer 2.5 2 12.3 3.6 Over €10 bn 70% BNP Paribas 2.5 1 10.9 3.0 Saint-Gobain 2.5 N/A 19.4 3.4 €5 bn to €10 bn 18% Swiss Re 2.5 N/A 8.4 4.7 €1 bn to €5 bn 9% DNB 2.4 1 9.9 2.3 Less than €1 bn 3% 0% Graded 4 30% Not Graded Average P/E 12.6 Average yield 4.4% Stock concentration Source: Schroders/FactSet as at 30/09/13. P/E (FY1) and Yield sourced from FactSet as at 30/09/13. Averages use simple averages Schroders' Maximiser range of funds | October 2013 31
  • 33. Our latest addition Intel Investment thesis World leader in semiconductors Slipped-up by focussing on processor speed instead of power-efficiency Now focussing on power-saving: R&D budget is 50% of ARM market cap. New Silvermont chips use half the power of previous generations According to anandtech.com (May 6th 2013): ‘it’s extremely likely that with Silvermont Intel will be able to drive down to far lower power levels than anything we’ve ever measured’ Net cash balance sheet 4% dividend yield, 10% ‘normalised’ FCF yield Source: Graph from Intel, 10 May 2012. Yield data Bloomberg, as at 06 September 2013 Schroders' Maximiser range of funds | October 2013 32
  • 34. Equity conclusions High-yielding stocks have out-performed over the long term; focussing on dividends directs us to profitable sections of the market The high-yield stock universe has large sector concentrations, we are diversified We are not bear-market investors, and have provided attractive capital returns, as well as income We still see attractive valuations in Europe-listed high-yielding stocks, while US-listed high-yielding stocks look expensive European equities are the also cheapest region globally on a cyclically-adjusted P/E, suggesting attractive totally returns, not just income Schroders' Maximiser range of funds | October 2013 33
  • 35. Asian equities
  • 36. Asian income opportunities in most markets 2013E: Quartile distribution of dividend yield by country (%) 5 4 3 2 1 Weighted average Thailand Taiwan Singapore Philippines Malaysia Korea Indonesia Hong Kong China Australia 0 Median Source: JPMorgan, 12 August 2013 Forecast risk warning: Please refer to the important information slide at the end of the presentation Schroders' Maximiser range of funds | October 2013 35
  • 37. Asian income – comfortable payout ratios Payout ratios rose as earnings fell 40 100 35 90 30 80 25 70 20 60 15 50 10 40 5 30 0 20 05 06 07 08 Trailing earnings 09 10 11 12 13 Dividend Payout (rhs) Source: Bloomberg, 30 June 2013 Schroders' Maximiser range of funds | October 2013 36
  • 38. Asian outlook Expectations for Asian equities subdued – less so for bonds Citigroup Asian risk-love indicator1 Foreign debt and equity holdings in Asia2 Foreign holdings (%, sample avg) 3.2 60 35% 2.4 80 30% Euphoric 40 1.6 20 0.8 25% 20% 0 0.0 15% -20 -0.8 -40 -1.6 Distress 10% -2.4 -80 92 94 96 98 00 02 04 06 08 10 MSCI AC Asia ex-Japan 6-m forward return Asia ex-Japan Risk-love (RHS) 5% -3.2 -60 0% 12 Debt Equity 1 Source: MSCI, Citi Research, June 2013 2 Source: Emerging Advisors Group, June 2013 Schroders' Maximiser range of funds | October 2013 37
  • 39. Asian outlook Most of Asia looks in good shape to weather storms Foreign debt metrics (select crisis countries) 240% 220% 200% 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% 370% 1990 Current account balance as % of GDP 25% 695% 1990 20% 15% 10% 5% 0% -5% Pre-Crisis Year 2012 1995-96 Singapore Taiwan 1989 Japan 1989 China 1993 India 1990 Korea Hong Kong Indonesia Malaysia Thailand Vietnam India 1990 Vietnam Philippines Indonesia Thailand Malaysia Short Term External Debt as % FX Reserves -15% Philippines External Debt as % Goods & Services Exports Korea India 1990 Vietnam Philippines Indonesia Thailand Malaysia Korea -10% 2012 Source: DSG Asia, May 2013 Schroders' Maximiser range of funds | October 2013 38
  • 40. Schroder ISF Asian Dividend Maximiser Portfolio Diversified portfolio by geography and sector Portfolio by geography Portfolio by sector Malaysia and TIP* not overwritten Australia 26.0% New Zealand 1.1% HK/China 28.7% South Korea 6.6% TIP* 8.6% Malaysia 0.9% Taiwan 13.3% Singapore 11.7% Cash 3.1% Source: PRISM, as at 30 September 2013, based on un-audited data *Thailand, Indonesia, Philippines The above is for illustrative purposes only and is not a recommendation to buy or sell Schroders' Maximiser range of funds | October 2013 Real Estate 15.1% Other Financial 3.9% Telecoms 13.8% Consumer Staples 1.2% Energy 3.5% Information Technology 12.9% Cash 3.1% Banks 15.5% Consumer Disc 6.4% Health Care 0.0% Materials 10.8% Industrials 13.8% Utilities 0.0% 39
  • 41. Volatility So why are investors cautious about equities?
  • 42. The challenge Understanding and accepting equity volatility risk Distribution of US S&P 500 returns since 1870 -50 -40 2001 1973 1966 1957 1941 1940 1920 1903 1894 1893 1890 1884 1876 2002 1974 1930 1917 1907 2008 1937 1931 -30 2000 1990 1981 1977 1969 1962 1953 1946 1939 1934 1932 1929 1914 1913 1910 1887 1883 1877 1873 -20 -10 2011 2007 2005 1994 1992 1987 1984 1978 1970 1960 1956 1948 1947 1923 1916 1912 1911 1906 1902 1899 1896 1895 1892 1889 1888 1882 1881 1875 1874 2012 2010 2006 2004 1993 1988 1986 1979 1972 1971 1968 1965 1964 1959 1952 1949 1944 1926 1921 1909 1905 1901 1900 1897 1886 1878 1872 1871 0 10 Nominal % total return 2009 2003 1999 1998 1996 1983 1982 1976 1967 1963 1961 1951 1943 1942 1925 1924 1922 1919 1918 1898 1891 1885 1880 20 1997 1995 1991 1989 1985 1980 1975 1955 1950 1945 1938 1936 1927 1915 1904 30 1958 1935 1928 1908 1879 40 1954 1933 50 60 Source: Global Financial Data, Thomson Datastream, Schroders, 31 December 2012 Schroders' Maximiser range of funds | October 2013 41
  • 43. Mean reversion – another way to address volatility? Investing for yield, value and quality plays to mean reversion -50 -40 2001 1973 1966 1957 1941 1940 1920 1903 1894 1893 1890 1884 1876 2002 1974 1930 1917 1907 2008 1937 1931 -30 2000 1990 1981 1977 1969 1962 1953 1946 1939 1934 1932 1929 1914 1913 1910 1887 1883 1877 1873 -20 -10 2011 2007 2005 1994 1992 1987 1984 1978 1970 1960 1956 1948 1947 1923 1916 1912 1911 1906 1902 1899 1896 1895 1892 1889 1888 1882 1881 1875 1874 2012 2010 2006 2004 1993 1988 1986 1979 1972 1971 1968 1965 1964 1959 1952 1949 1944 1926 1921 1909 1905 1901 1900 1897 1886 1878 1872 1871 0 10 Nominal % total return 2009 2003 1999 1998 1996 1983 1982 1976 1967 1963 1961 1951 1943 1942 1925 1924 1922 1919 1918 1898 1891 1885 1880 20 1997 1995 1991 1989 1985 1980 1975 1955 1950 1945 1938 1936 1927 1915 1904 30 1958 1935 1928 1908 1879 40 1954 1933 50 60 Source: Global Financial Data, Thomson Datastream, Schroders, 31 December 2012 Schroders' Maximiser range of funds | October 2013 42
  • 44. Understanding and accepting equity volatility risk Distribution of US S&P 500 returns since 1870 Invest for longer periods to reduce the volatility of outcomes -50 -40 2001 1973 1966 1957 1941 1940 1920 1903 1894 1893 1890 1884 1876 2002 1974 1930 1917 1907 2008 1937 1931 -30 2000 1990 1981 1977 1969 1962 1953 1946 1939 1934 1932 1929 1914 1913 1910 1887 1883 1877 1873 -20 -10 2011 2007 2005 1994 1992 1987 1984 1978 1970 1960 1956 1948 1947 1923 1916 1912 1911 1906 1902 1899 1896 1895 1892 1889 1888 1882 1881 1875 1874 2012 2010 2006 2004 1993 1988 1986 1979 1972 1971 1968 1965 1964 1959 1952 1949 1944 1926 1921 1909 1905 1901 1900 1897 1886 1878 1872 1871 0 10 Nominal % total return 2009 2003 1999 1998 1996 1983 1982 1976 1967 1963 1961 1951 1943 1942 1925 1924 1922 1919 1918 1898 1891 1885 1880 20 1997 1995 1991 1989 1985 1980 1975 1955 1950 1945 1938 1936 1927 1915 1904 30 1958 1935 1928 1908 1879 40 1954 1933 50 60 Source: Global Financial Data, Thomson Datastream, Schroders, 31 December 2012 Schroders' Maximiser range of funds | October 2013 43
  • 45. Understanding and accepting equity volatility risk Understanding mean reversion the case for confidence? fear? -50 -40 2001 1973 1966 1957 1941 1940 1920 1903 1894 1893 1890 1884 1876 2002 1974 1930 1917 1907 2008 1937 1931 -30 2000 1990 1981 1977 1969 1962 1953 1946 1939 1934 1932 1929 1914 1913 1910 1887 1883 1877 1873 -20 -10 2011 2007 2005 1994 1992 1987 1984 1978 1970 1960 1956 1948 1947 1923 1916 1912 1911 1906 1902 1899 1896 1895 1892 1889 1888 1882 1881 1875 1874 This is NORMAL behaviour 2012 2010 2006 2004 1993 1988 1986 1979 1972 1971 1968 1965 1964 1959 1952 1949 1944 1926 1921 1909 1905 1901 1900 1897 1886 1878 1872 1871 0 10 Nominal % total return 2009 2003 1999 1998 1996 1983 1982 1976 1967 1963 1961 1951 1943 1942 1925 1924 1922 1919 1918 1898 1891 1885 1880 20 1997 1995 1991 1989 1985 1980 1975 1955 1950 1945 1938 1936 1927 1915 1904 30 1958 1935 1928 1908 1879 40 1954 1933 50 60 Source: Global Financial Data, Thomson Datastream, Schroders, 31 December 2012 Schroders' Maximiser range of funds | October 2013 44
  • 46. The Maximiser strategy
  • 47. Schroders’ Maximiser strategy Exchanging some uncertain potential gain for a regular income Potential capital growth that is sold for upfront payment* Option premium: circa 4% p.a.** We retain the first amount of potential capital growth Stock price Strike price Initial equity value 100% 100% Dividend income: circa 4% p.a.** 8% yield p.a.** We repeat this process on a rolling 3 monthly basis The repeated application of the overlay over three-monthly periods will increase the income paid to investors and reduce volatility, but there is the potential the performance or capital value may be eroded * Only some upside is sold, in order to preserve the potential for capital growth over the option period **The gross target yield quoted is an estimate and is not guaranteed. Please note, Schroder ISF Asian Dividend Maximiser targets a distributable income of 7% per annum. Schroders' Maximiser range of funds | October 2013 46
  • 48. What can investors expect? To get 8% income, maximum capital gain on any individual stock in the portfolio is expected to be around 10% on average1 per three-month option term across a market cycle – sacrificing some potential growth enables us to boost the income available Likely fund performance – Strongly rising stocks – likely to underperform – Gently rising, flat or declining stocks – potential to outperform The strategy involves the repeated application of the overlay over three-monthly periods which will increase the income paid to investors and reduce volatility, but there is the potential the performance or capital value may be eroded 1 This is the weighted average based on the individual strike prices if all stocks are overwritten. Maximum growth is an indication only, based on an equity market cycle, and may change. Schroders' Maximiser range of funds | October 2013 47
  • 49. Schroder ISF European Dividend Maximiser A stable, enhanced yield with less volatility Yield amount distributed per EUR 1,000 invested from 5/10/07, being launch date of Schroder ISF European Dividend Maximiser Funds selection shown in the chart comprises: BNL Azioni Europa Dividendo; UniDividendenAss A; BNP Paribas Comfort Equity High Dividend Europe; Allianz RCM High Dividend Discount - A – EUR; Henderson Horizon Pan European Dividend Equity Fund; Deka-DividendValue Europa CF; Parvest Equity High Dividend Europe; 8. Dexia Equities L - Europe High Dividend; HI-DividendenPlus Europa-Fonds; Lyxor ETF DJ Stoxx Select Dividend 30; iShares DJ STOXX Select Dividend 30 (DE). Source: Bloomberg , as at 31 March 2013 Schroders' Maximiser range of funds | October 2013 48
  • 50. Risk control Sale of call options via competitive auction – we select the highest prices Example: Auction conducted 21 March 2013 for Schroder ISF European Dividend Maximiser Notional amount overwritten was 39.4% of NAV Counterparty A Counterparty B Counterparty C Counterparty D Price on expiry Option premium BNP Paribas 109.00% 110.70% 107.73% 108.00% 99.46% 1.80% Solvay 107.30% 108.25% 106.51% 107.00% 99.95% 1.60% Ageas 105.80% 105.45% 103.49% 105.50% 106.61% 1.60% Swedbank 107.10% 107.43% 106.63% 108.25% 101.43% 1.20% St Gobain 106.00% 106.80% 105.11% 106.00% 104.12% 1.80% Stock No counterparty risk – cash settlement two days after trading No leverage employed – we never sell potential upside unless we own the underlying stock Source: Schroders, 31July 2013 Schroders' Maximiser range of funds | October 2013 49
  • 51. The Maximiser overlay Example: BNP Paribas in Schroder ISF European Dividend Maximiser Strike price set at 110.70% on 21/03/13 for 1.80% premium Option expires without payment to counterparty Source: Schroders, share price up to 31 July 2013. Stock examples are for illustrative purposes only and are not a recommendation to buy or sell Schroders' Maximiser range of funds | October 2013 50
  • 52. The Maximiser overlay Example: BNP Paribas in Schroder ISF European Dividend Maximiser Stock purchased 21/3/13 Source: Schroders, share price up to 30 September 2013 Stock examples are for illustrative purposes only and are not a recommendation to buy or sell Schroders' Maximiser range of funds | October 2013 51
  • 53. The Maximiser overlay Example: BMW in Schroder ISF Global Dividend Maximiser Stock price capped by options in some trades during this year’s rally Total equity return in 2013 so far (to 31 Aug) of 17% Total contribution to portfolio performance in 2013 so far (to 31 Aug): +0.25%* Contribution due to options in 2013 so far (to 31 Aug): 0.00%* Stock purchased Source: Schroders, share price up to 30 August 2013 *Contributions based on portfolio return, calculated internally, unaudited and gross of fees, as at 30 August 2013. Stock examples are for illustrative purposes only and are not a recommendation to buy or sell Schroders' Maximiser range of funds | October 2013 52
  • 54. Schroder ISF European Dividend Maximiser Income and price history – A Distribution shares Price on record date* (EUR) EUR per unit Distribution is a function of capital value Source: Schroders, 30 September 2013, in EUR. The target yield quoted is an estimate and not guaranteed. *The yield is calculated by dividing the quarterly distribution by the unit price on the record date (which is the day prior to the ex-dividend date) Note: change of accounting date affects line end Q4 2011 and Q1 2012 Schroders' Maximiser range of funds | October 2013 53
  • 55. Schroder ISF Global Dividend Maximiser Income and price history – A Distribution shares Price on record date* (USD) USD per unit Distribution is a function of capital value ** Source: Schroders, 30 September 2013, in USD. The target yield quoted is an estimate and not guaranteed. *The yield is calculated by dividing by the quarterly distribution by the unit price on the record date (which is the day prior to the ex-dividend date). ** Increased payment in March 2012 accounts for reduced payment in Q4 2011 as a result of a change in accounting date. Schroders' Maximiser range of funds | October 2013 54
  • 56. Schroder ISF Asian Dividend Maximiser Target 7%1 distribution, payable monthly Comparable fund, Schroder Asian Income Maximiser, has delivered yield to target since launch Pence per unit 70 6 60 5 50 4 40 3 30 2 20 1 10 0 Dec 09 7.60%** 7.75% Dec 10 7.50% Dec 11 Quarterly mid-price, GBP (lhs) 0 Dec 12 ppu (rhs) Schroder ISF Asian Dividend Maximiser will distribute monthly – Monthly yield calculated as amount distributed per month divided by the price at the end of the month – Annual yield calculated as the simple sum of the 12 monthly yields Source: Schroders, 8 August 2013. 1 The target yield quoted is an estimate and not guaranteed. Price and distribution shown are for A Income units of Schroder Asian Income Maximiser. The yield is calculated by dividing the quarterly distribution by the fund price from the exdividend date at the beginning of the quarter. The annual yield is the simple sum of four quarterly yields. **Annualised – the first year only includes two payments covering the 7 month period from launch on 1 June 2010 to end December 2010. Schroders' Maximiser range of funds | October 2013 55
  • 57. Summary Distinctive, high yield funds with an attractive proposition and investor appeal Equities, and European equities in particular, offer extremely attractive yields in comparison to other asset classes Sale of some, but not all the potential upside on a rolling 3-month basis to obtain extra yield (>~110% depending on level of volatility) Only potential upside of actual holdings is sold – the fund only ever sells what it owns Competitive auction process, with no broker or extra fund management charges No counterparty risk Maximiser fund range started in 2005, now with USD 3.9 billion* under management Distinctive funds with a high target yield Two sources of yield, independent of interest rates * As of 31 August 2013 Schroders' Maximiser range of funds | October 2013 56
  • 58. Appendix Volatility - where does it come from?
  • 59. Where does the volatility come from? Example: Proctor & Gamble US dollar 70 68 66 64 62 60 58 56 54 52 50 01/2010 04/2010 06/2010 09/2010 12/2010 03/2011 06/2011 09/2011 12/2011 Source: Based on Bloomberg data, PG UN Equity, 31 December 2009 – 31 December 2011 Securities shown are for illustrative purposes only and not a recommendation or buy or sell Schroders' Maximiser range of funds | October 2013 58
  • 60. What exactly is volatility? Proctor & Gamble daily price changes % 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% -2.0% -2.5% -3.0% 01/2010 04/2010 06/2010 09/2010 12/2010 03/2011 06/2011 09/2011 -3.5% -4.0% 12/2011 Source: Based on Bloomberg data, PG UN Equity, 31 December 2009 – 31 December 2011 Schroders' Maximiser range of funds | October 2013 59
  • 61. What exactly is volatility? Proctor & Gamble daily price changes % 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% -2.0% -2.5% -3.0% -3.5% -4.0% Source: Based on Bloomberg data, PG UN Equity, 31 December 2009 – 31 December 2011 Schroders' Maximiser range of funds | October 2013 60
  • 62. A familiar pattern emerges Proctor & Gamble daily price changes % 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% -2.0% -2.5% -3.0% -3.5% -4.0% -4.0% -3.5% -3.0% -2.5% -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% Source: Based on Bloomberg data, PG UN Equity, 31 December 2009 – 31 December 2011 Schroders' Maximiser range of funds | October 2013 61
  • 63. This is no coincidence We don’t have to wait 140 years to observe the emerging pattern 1931 2008 1937 2002 1974 1930 1917 1907 2001 1973 1966 1957 1941 1940 1920 1903 1894 1893 1890 1884 1876 2000 1990 1981 1977 1969 1962 1953 1946 1939 1934 1932 1929 1914 1913 1910 1887 1883 1877 1873 -4.0% -3.5% -3.0% -2.5% -2.0% -1.5% -1.0% -0.5% 2011 2007 2005 1994 1992 1987 1984 1978 1970 1960 1956 1948 1947 1923 1916 1912 1911 1906 1902 1899 1896 1895 1892 1889 1888 1882 1881 1875 1874 2012 2010 2006 2004 1993 1988 1986 1979 1972 1971 1968 1965 1964 1959 1952 1949 1944 1926 1921 1909 1905 1901 1900 1897 1886 1878 1872 1871 2009 2003 1999 1998 1996 1983 1982 1976 1967 1963 1961 1951 1943 1942 1925 1924 1922 1919 1918 1898 1891 1885 1880 1997 1995 1991 1989 1985 1980 1975 1955 1950 1945 1938 1936 1927 1915 1904 1958 1935 1928 1908 1879 1954 1933 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% Source: Market data from Global Financial Data, Thomson Datastream, Schroders, 31 December 2012. Stock data: Bloomberg, PG UN Equity, 31 December 2009 – 31 December 2011 Schroders' Maximiser range of funds | October 2013 62
  • 64. The distribution stretches with time By trading small amounts daily you can trade the final outcome -50 -40 2001 1973 1966 1957 1941 1940 1920 1903 1894 1893 1890 1884 1876 2002 1974 1930 1917 1907 2008 1937 1931 -30 2000 1990 1981 1977 1969 1962 1953 1946 1939 1934 1932 1929 1914 1913 1910 1887 1883 1877 1873 -20 -10 2011 2007 2005 1994 1992 1987 1984 1978 1970 1960 1956 1948 1947 1923 1916 1912 1911 1906 1902 1899 1896 1895 1892 1889 1888 1882 1881 1875 1874 2012 2010 2006 2004 1993 1988 1986 1979 1972 1971 1968 1965 1964 1959 1952 1949 1944 1926 1921 1909 1905 1901 1900 1897 1886 1878 1872 1871 0 10 Nominal % total return 2009 2003 1999 1998 1996 1983 1982 1976 1967 1963 1961 1951 1943 1942 1925 1924 1922 1919 1918 1898 1891 1885 1880 20 1997 1995 1991 1989 1985 1980 1975 1955 1950 1945 1938 1936 1927 1915 1904 30 1958 1935 1928 1908 1879 40 1954 1933 50 60 Source: Global Financial Data, Thomson Datastream, Schroders, 31 December 2012 Schroders' Maximiser range of funds | October 2013 63
  • 65. Schroders’ Maximiser strategy A two-step strategy Step 1: Investing in an actively managed equity portfolio for the asset return Step 2: Enhancing the yield by selling some of the potential upside Source: Based on Bloomberg data, PG UN Equity, 31 December 2009 – 31 December 2012 Schroders' Maximiser range of funds | October 2013 64
  • 66. Drivers of recent Global equity portfolio performance
  • 67. S&P 500 vs Stoxx Europe 600 Divergence since end of January 2013 125 120 115 110 105 100 95 Dec-12 Jan-13 Feb-13 STXE 600 ($) Mar-13 Apr-13 May-13 STXE 600 € Jun-13 Jul-13 Aug-13 Sep-13 S&P 500 Source: Thomson Datasream. 30 September 2013. Information: Total Return index used. Schroders' Maximiser range of funds | October 2013 66
  • 68. Recent fund performance: Schroder ISF Global Equity Yield Year to date to 30 September 2013 120 118 116 114 112 110 108 106 104 102 100 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 MSCI World Jun-13 Jul-13 Aug-13 Sep-13 Schroder ISF Glbl Eq Yield A Source: Morningstar. Performance data is based on ‘A’ class shares, bid to bid, net of fees, In USD. Schroders' Maximiser range of funds | October 2013 67
  • 69. Important Information The views and opinions contained herein are those of Thomas See and Ian Kelly, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. Important Information: This presentation does not constitute an offer to anyone, or a solicitation by anyone, to subscribe for shares of Schroder International Selection Fund (the “Company”). Nothing in this document should be construed as advice and is therefore not a recommendation to buy or sell shares. Subscriptions for shares of the Company can only be made on the basis of its latest Key Investor Information Document and prospectus, together with the latest audited annual report (and subsequent unaudited semi-annual report, if published), copies of which can be obtained, free of charge, from Schroder Investment Management (Luxembourg) S.A. An investment in the Company entails risks, which are fully described in the prospectus. Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get the amount originally invested. Any forecasts in this document should not be relied upon, are not guaranteed and are provided only as at the date of issue. Our forecasts are based on our own assumptions which may change. We accept no responsibility for any errors of fact or opinion and assume no obligation to provide you with any changes to our assumptions or forecasts. Forecasts and assumptions may be affected by external economic or other factors. Risk considerations: The capital is not guaranteed. The fund intends to make regular yield payments to investors and, if its income is insufficient to cover these payments, these payments may reduce the fund's capital. Investments denominated in a currency other than that of the share-class may not be hedged. The market movements between those currencies will impact the share-class. The Fund will not hedge its market risk in a down cycle. The value of the fund will move similarly to the markets. The derivative strategy is applied repeatedly over three-monthly periods. This strategy will increase the income paid to investors and reduce the volatility of returns, but there is the potential the performance or capital value may be eroded. Third party data is owned or licensed by the data provider and may not be reproduced or extracted and used for any other purpose without the data provider's consent. Third party data is provided without any warranties of any kind. The data provider and issuer of the document shall have no liability in connection with the third party data. The Prospectus and/or www.schroders.com contains additional disclaimers which apply to the third party data. FTSE International Limited (“FTSE”) © FTSE (2013). “FTSE®” is a trade mark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE International Limited under licence. All rights in the FTSE indices and / or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and / or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent. This presentation is issued by Schroder Investment Management Ltd., 31, Gresham Street, EC2V 7QA, who is authorised and regulated by the Financial Conduct Authority. For your security, all telephone calls are recorded. Schroders' Maximiser range of funds | October 2013 68

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