Schroders has expanded its exchange traded fund offering to Europe, launching its first active ETFs in the region as the £750bn asset manager seeks to broaden access to its investment expertise and capture growing demand for flexible, listed products.
The London-based firm said the new capability demonstrates its ability to “develop and offer clients actively managed and relevant products which meet their evolving needs”, building on ETF operations it has already established in the US and Australia.
The first two products — Schroder ETFs ICAV – Schroder Global Equity Active UCITS ETF and Schroder ETFs ICAV – Schroder Global Investment Grade Corporate Bond Active UCITS ETF — are intended to extend the reach of strategies that collectively manage more than $27bn. The funds are designed to sit alongside Schroders’ wider product line-up, offering investors access to the group’s long-standing active management approach through the low-cost, exchange-traded format.
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The equity ETF provides wider access to Schroders’ QEP Global Core strategy, which manages about $24bn. Overseen by Lukas Kamblevicius, co-head of Schroders’ Quantitative Equity Products investment team, the strategy covers a global universe of around 15,000 stocks. Since inception 25 years ago, it has outperformed in 20 of 25 calendar years, delivering a 1 percentage point annualised return gross of fees against its MSCI World benchmark. The ETF is designed to provide consistent performance with lower relative risk.
The fixed income ETF will broaden availability of a $3bn global investment grade corporate bond strategy that had previously been confined to segregated mandates. The fund invests solely in investment grade securities, with no exposure to high yield or off-benchmark bonds. It targets income and capital growth in excess of the Bloomberg Global Aggregate Corporate Index, with limited benchmark-relative risk and a low level of tracking error. The investment team has a six-year track record, generating 1.4 percentage points of annualised relative returns over that period.
Both products will initially list on Xetra Deutsche Börse. Listings on the London Stock Exchange, Borsa Italiana and SIX Swiss Exchange will follow.
Johanna Kyrklund, Schroders’ group chief investment officer, said the launch represented the first time the firm’s European clients would be able to access its active investment strategies through ETF wrappers.
“We are building on the decade of experience we already have offering active ETFs by bringing two of our world-class equities and fixed income strategies to a broader audience,” she said. “In today’s dynamic market environment, access to market-leading active management expertise is crucial. These launches will ensure our clients can benefit from the flexibility and accessibility of an ETF wrapper, as well as the potential superior returns delivered by our active investing edge.”
Meagen Burnett, chief financial officer, added that the expansion “demonstrates our ability to harness the scale of Schroders’ investment and operating platforms to enhance distribution access points for existing and new clients”. The move, she said, would reinforce the group’s commitment to broadening investor choice and offering “the variety of investment tools and differentiated returns our clients increasingly expect”.
Schroders first entered the active ETF space in 2016 in Australia before launching products in the US in 2018 in partnership with Hartford Funds. The addition of a European platform brings its ETF capabilities across three continents, with the group signalling that further strategies could be added in future.
The move comes as global ETF assets continue to swell, passing $12tn this year, and as demand for actively managed ETFs — long dominated by passive funds — gathers pace. For Schroders, the latest step brings a 220-year heritage of active investment into a format that is reshaping how investors access markets.
