Schroders' Maximiser fund range
A tested stockmarket based investment strategy targeting a 5 or 7%* annual yield
Schroders’ Maximiser strategy focuses on delivering a sustainable high level of income from a stock-market based investment.
Employing the skills of Schroders’ highly experienced Structured Investment Team and specialist equity investment teams, the Maximiser strategy has stood the test of time.
*The target yield quoted is an estimate and is not guaranteed. It is the sum of the four quarterly distributions that comprise the fund year, each calculated by dividing the quarterly distribution amount by the unit price at the start of that quarter. The Manager will notify registered unitholders if the target yield changes.
Could Maximiser meet your clients’ investment needs?
Find out more about the Maximiser strategy:
- How the strategy works
- How it differs from other stock-market based income investment strategies
- What the risks are
Confirm your understanding of the Maximiser strategy
Be an informed investor. This short test will help confirm how well you understand the Maximiser strategy.
Which of the following statements about the Maximiser strategy is correct?
a) It’s a stock-market based investment focused on delivering a sustainable, high level of income
b) It’s a cash-based savings account focused on delivering a sustainable, high level of income
Schroders’ range of Maximiser funds employ a tested stock-market based investment strategy focused on delivering a sustainable, high level of income. The Maximiser funds invest in the stock-market to provide income because this has the potential to deliver attractive returns over the long-term. As the economy grows over time, the stock-market, which reflects the value of companies as a whole, tends to rise and many companies are able to increase their payments, or dividends to shareholders.
a) It’s a low risk investment, suitable for providing income over a short period
The Maximiser funds invest in the stock-market to provide income because this has the potential to deliver attractive returns over the long-term. As the economy grows over time, the stock-market, which reflects the value of companies as a whole, tends to rise and many companies are able to increase their payments, or dividends to shareholders. You should be aware, however, that your capital is at risk with a stock-market based investment, unlike with a savings account. This means there’s a chance that you may not get back the original amount invested when you come to sell your investment. On a day-to-day basis, stock-market based investments can also be subject to greater up and down movements than some other investments, such as bonds, which offer a fixed income stream. So if you’re specifically seeking a low risk investment or expect to invest for less than three to five years, the Schroder Maximiser funds will not be for you.
b) It’s an investment that moves up and down with the stock-market, which is only suitable for providing income when investing for 5 years or more
a) It targets a 7% (not guaranteed) annual yield from a combination of dividends paid by companies and an income enhancement strategy using ‘covered call’ options
b) It targets a 7% (not guaranteed) annual yield from company dividends
Schroders Maximiser strategy targets income from two sources: The first of these is the natural income provided by company dividends. Our fund managers invest in a well diversified portfolio of company shares with a target of achieving an annual yield of around 3 ½%. The second is a tested “covered call option” income enhancement strategy. Many Financial institutions are willing to enter into contracts relating to individual shares whereby they agree to provide an upfront payment in exchange for any rise in the share price above a certain level over a set period of time. These are known as “covered call options”, which are categorised as “derivatives”. Our fund managers sell these option contracts on a recurring basis, typically for three month periods. The upfront payments from buyers are used to help boost the natural annual dividend by around a further 3 ½%. The term “derivatives” sometimes sets off alarm bells amongst investors, as some can be risky. However, there is no associated risk in using them for Maximiser investors other than the ceiling they put on the potential growth from the stocks they relate to.
a) Long-term total returns made up of income and capital growth are likely to be the same as they would be if the Maximiser strategy was not applied
When considering the Maximiser funds it is important to understand that total returns, made up of income and capital growth, tend to be slightly lower over the long term than those generated by the same investments without the option strategy. This is due to the cap on potential growth. However, during periods where the market is falling, the upfront payments can help to cushion the funds from the full impact. The cushioning is limited to the amount received from selling options.
b) Long-term total returns made up of income and capital growth are likely to be slightly lower than they would be if the Maximiser strategy was not applied
Investing in a Maximiser fund
These statements are designed to help determine whether a Maximiser fund might be suitable for an investor. If an investor disagrees with any statement, the fund will not meet their needs.
- I accept that income payments will reduce capital growth when the primary objective is high income
- I’m comfortable with the risks associated with investing in equities
- I’m prepared to take some risk with my capital in order to generate income and am not looking for a low risk fund
- I’m comfortable with the use of derivative contracts, which derive their value from stocks, to enhance income
- I expect to invest for the long term (five years or more).
Contact Investor Services to invest now.
0800 718 777* | firstname.lastname@example.org
*Please note that Schroders is not authorised to give you advice on your investment.
Please note, past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested