Notification of changes to the underlying fund of Schroder Global Multi-Asset Income funds

08 Apr 2024

Notification of changes to the underlying fund of: 

• R166 Schroder Global Multi-Asset Income (GBP HDG) 
• R167 Schroder Global Multi-Asset Income (USD) 

(Together the “Affected ILP sub-funds”) 

We have been notified by the directors and the management company of Schroder International Selection Fund (the “Company”) of upcoming changes to the investment objective and comparator benchmark of the underlying fund of the Affected ILP sub-funds. These changes will take effect from 8 May 2024 (the “Effective Date”).

Background and rationale
According to the Company, for over a decade market conditions enabled explicit income ranges to be featured in the objective of the underlying fund of the Affected ILP sub-funds to indicate what an investor could expect as a distribution. However, with the winding down of government quantitative easing, yields have risen sharply and interest rate volatility is unlikely to remain as static going forwards. As a result, the level of income the underlying fund of the Affected ILP sub-funds is able to generate could change significantly and move outside of the target range.

Investment objective changes
In order to prevent the actual dividend payments of the underlying fund of the Affected ILP sub-funds from falling outside of the target range, the income target of 3 - 5% per annum will be removed from the investment objective of the underlying fund of the Affected ILP sub-funds from the Effective Date. Accordingly, the performance of the underlying fund of the Affected ILP sub-funds will no longer be assessed against such income target.

The underlying fund of the Affected ILP sub-funds will continue to aim to deliver income in addition to capital growth, but the reference to a three to five year period in respect of capital growth will be removed from the investment objective of the underlying fund of the Affected ILP sub-funds.

Update on the use of comparator benchmark
The existing comparator benchmark of the underlying fund of the Affected ILP sub-funds, which is presently used for volatility and sustainability purposes, will also be used as a performance comparator 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.