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Schroders bags four awards, unfazed by high interest rate environment

The Edge Singapore
The Edge Singapore • 4 min read
Schroders bags four awards, unfazed by high interest rate environment
Schroders: Active management is key to capturing stock market opportunities. Photo: Bloomberg
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Four funds from asset management company Schroders have won as many awards at the Best Funds Awards 2024 hosted by The Edge Singapore. Schroders is one of three fund houses that achieved the highest number of winning funds among fund houses this year.

The Schroder International Selection Fund Global Equity Alpha C Accumulation USD was one of the top three funds under the CPF category. Schroder International Selection Fund Global Sustainable Growth C Accumulation USD won the global broad category (equity) with a fund size equal to or greater than US$1 billion ($1.36 billion). The Schroder International Selection Fund Asian Total Return C Accumulation USD won the global category (Asia Ex-Japan equity).

Last but not least, Schroders was the only winner under the Morningstar (Singapore equity) Category, an award to distinguish funds by what they own and by their prospectus objectives and styles.

The way Schroders sees it, times have changed and so must the way investors look at equities. As the world continues to be shaped by a host of new forces, companies need to change how they operate to be successful over the long term, the firm adds.

“That’s why we believe active management is key to capturing stock market opportunities — using experience, insights and innovation to help you navigate a changing market,” says the asset management firm. The firm has built an extensive equities portfolio focused on delivering long-term investment returns, such as the four funds mentioned above.

Schroders believes its global research platform and proprietary technology give it an investment edge. Its data insights unit, which helps inform investment decisions through unique information analysis, combined with its suite of sustainability research and impact measurement tools can help identify companies with unrecognised or underappreciated return potential.  

See also: Towards a flourishing fund management industry

While data is just one part of the equation, Schroders attributes its success to how its fund managers and analysts challenge each other and scrutinise investment ideas to help ensure only the best make it through.

“The world is changing fast, and we constantly need to stay ahead of it. That’s why we need to be innovative, flexible and, above all, always committed to continuous improvement to seek better outcomes for our clients,” says Schroders.

One such example is the US Federal Reserve (Fed) recently announcing that there is no urgency to cut interest rates, despite market experts expecting at least one rate cut this year. While the world waits on whether or not a rate cut will happen, global inflation is expected to remain high.

See also: PIMCO emerges as top winner with four winning funds across fixed income securities

Meanwhile, when it comes to sustainability, Schroders believes companies that regularly engage with their investors on climate-related matters are associated with better investment returns. Olga Cowings, active ownership operations and insights manager at Schroders, says firms that engage investors at least twice a year achieved cumulative peer-adjusted returns that were 4% higher than peers after one year of engagement and 12% higher after two years of engagement.

Cowings admits that companies may set emissions reduction targets for many other reasons. That is why she says: “We do not claim that our engagements are the sole factor in driving the changes described here. Even so, the results are encouraging in suggesting a link between engagement on climate targets, actual emissions reductions, and improved investment returns.”

Between January 2010 and June 2023, Schroders analysed its 2,744 climate engagements with 1,351 companies to examine the changes seen among companies it engaged with, compared to companies where there has been no, or less intensive, engagement.

Reiterating the importance of a thoughtful approach to stewardship, Cowings notes that there is a danger that, in some quarters, voting records are perceived as a measure of good stewardship. However, Cowings points out that high numbers of votes against boards’ recommendations or support for independent shareholder resolutions do not necessarily imply a serious commitment to delivering sustainable change.

“Engaging with companies is often a lengthy process. It takes place behind the scenes, not in the spotlight of an AGM. It is early days, but this analysis of our climate engagements suggests that such committed engagement can bring tangible results,” Cowings adds.

 

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