Notification of changes to the underlying fund of R172 Schroder Strategic Bond (USD)
08 Apr 2024
We have been notified by the directors and the management company of Schroder International Selection Fund (the “Company”) of the following upcoming changes to the underlying fund of our R172 Schroder Strategic Bond (USD) investment-linked policy sub-fund (the "ILP sub-fund"). The change will take effect 8 May 2024 (the “Effective Date”).
Background and rationale
The investment objective of the underlying fund of the ILP sub-fund currently states that it aims to provide an absolute return (i.e. positive returns over a 12-month period in all market conditions). However, as bond market volatility has increased due to the recent market environment, the Company has noted that a 12-month time horizon to achieve an absolute return has become increasingly difficult to meet. The Company believe that a longer-term benchmark relative approach which take into account the performance and trends of the market will provide a more realistic target for the underlying fund of the ILP sub-fund.
Investment objective changes
From the Effective Date, the investment objective of the underlying fund of the ILP sub-fund will be updated to reflect the change of target from absolute return (i.e. positive returns over a 12-month period in all market conditions), to capital growth and income in excess of ICE BofA 3 Month US Treasury Bill Index over a three to five year period after fees have been deducted by investing in fixed and floating rate securities issued by governments, government agencies, supra-nationals and companies worldwide.
Removal of comparator benchmark and addition of target benchmark
From the Effective Date, the current comparator benchmark of the underlying fund of the ILP sub-fund, (i.e. ICE BofA 3 Month US Treasury Bill Index), will become the target benchmark. The underlying fund of the ILP sub-fund will no longer have a comparator benchmark, which was only included for performance comparison purposes.
The new target benchmark has been selected because the target return of the underlying fund of the ILP sub-fund is to deliver the return of that benchmark, as stated in the updated investment objective from the Effective Date.
Please refer to the sample client communication opposite for full details of the changes applicable.
We have contacted impacted policyholders and their financial advisers to notify them of the changes; primarily by e-shot, with letters sent by post where we do not hold a valid email, and to those who prefer to receive letters by post.
These changes will happen automatically within affected policies and policyholders do not need to take any action. We recommend that policyholders seek the advice of their usual financial adviser before making any investment decisions.
Should you have any questions regarding these changes, please contact the Investment Marketing Team.
