Schroders expands model portfolio business to international market

Asset management giant Schroders has unveiled Schroder Investment Solutions (SIS) International.

This follows the launch of its model portfolio solutions business in the UK in 2021.

Now, Schroders is extending its operation further with an international offering out of Guernsey for international clients comprising two ranges of model portfolios.

The proposition comprises active and sustainable models across a range of risk profiles and will be available on three platforms: Novia Global, Morningstar Wealth Platform, and 7IM.

The active models will be available in both pound sterling and US dollar, while the sustainable models will be available in pound sterling and then expanded based on demand.

The models will be managed in the same way as the current SIS model portfolios by Alex Funk, chief investment officer of Schroder Investment Solutions.

next step

funk told International Advisor: “When we reflect back to reflect on the launch of Schroder Investment Solutions, the continued growth and the investment we continue to make in solutions for financial intermediaries, this was the next step for us.

“We will be taking our onshore model portfolio service, Schroder Investment Solutions, and we’ll be expanding that into an international range. We will be taking the exact same process philosophy and making that available for financial advisers to use.

“For us, it’s about becoming an extension of the financial planning practice. We become advisers’ in-house investment partner by providing them an investment proposition.

“What we don’t want to be is just another product off the shelf. We are a partner and what we provide is a proposition.”

Support

Schroders said that the SIS international offering will also involve a provision of support for advisers similar to the UK proposition.

Digital factsheets and quarterly reporting will be available to advisers including a quarterly impact report for the sustainable models to ensure clients understand the positive impact of their investment on people and planet and alignment to the United Nations sustainable development goals.

Gillian Hepburn, head of UK intermediary solutions, added: “Good quality service and support is vital for any financial adviser selecting an investment partner for some or all of their centralized investment proposition.

“The international models will benefit from the same service proposition as the UK models including digital factsheets, monthly updates, quarterly reports including specific impact reporting for the Sustainable Models.”

“Quarterly updates and ad hoc webinars will also be made available, as well as a range of support, including face to face engagement.

“We firmly believe that the adviser is in full control of the client conversation, and, in addition, to delivering a best-in-class investment solution, a key focus for us is to ensure that all adviser/client contact is fully supported. ”

sustainable offering

One of the key features of SIS international is its sustainable model offering.

Funk added: “When it comes to investment, I think we have a track record of managing these portfolios in the local market, and then it’s about taking that same philosophy and moving that into the international space. There are less sustainable options in the international market. For us, it’s around understanding which asset classes and regions are better suited to sustainability investments versus other areas that are better for sort of impact investing.

“I think the most important bit around all of this is the reporting. I’d say investors want to know what they are investing in. They are saying to advisers ‘you need to achieve my financial outcomes’, but there is this additional mandate, ‘you also have to do good for people and the planet’.”

As the demand for sustainable products increases in the international market, advisers need to increase their knowledge around the investment strategy.

Hepburn said: “The reporting on sustainability is really important for us. The work that we’ve been doing with advisers in the last year in terms of ongoing education and support, we can deliver that into the offshore market.

“One of the things we’re finding now is that many advisers want to go a bit deeper into some of the topics, including path to net zero and active ownership. Whilst we’re still doing broader education, there are definitely advisers that want to go into more detail on topics.”

Price

The models will be priced with a management charge of 15 basis points.

Funk said: “I think when you think about pricing, you need to assess it from a business perspective by saying ‘at what level of price can I continue to grow business, we can continue to invest, and we can continue to deliver high levels’. of service to our clients?’

“Because we have an existing business solutions, we can continue to offer that solution at a price point that we think adds value to a business.

“When we set our price, we don’t say ‘we think we want to be the cheapest in the market’. ‘We’ll say at what point can we continually deliver and reinvest into the solutions business to provide’ and that’s really the genesis of where we got to from a pricing perspective.

“We want to continue what we provide on the onshore market into the international market. I think it is important for investors that might invest in both subsets to have continuity rather than have disparities between those two.”

Expansion of international business

SIS has seen a steady increase in assets under management since launch, currently £4.6bn ($5.3bn, €5.3bn), as at 30 June 2022, up from £4bn since launch in April 2021.

AI asked the company how global its ambitions are.

Funk added: “We’ve got an existing structure in place, and we’ve got regulatory licenses in multiple regions, so for us to switch something on wouldn’t take very long. But we would only do it where we know that our solution provides an outcome to a problem.

“It’s not just about launching for the fact of launching. It is about saying ‘what’s the problem, what does our distribution look like, and ultimately, can we then provide a service that meets these needs?’”




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