Euro Corporate Strategy - Schroders...Strong consistent track record through bull and bear markets...

Euro Corporate

Strategy

European Credit Team

February 2016

For professional investors only. This material is not suitable for retail clients *Schroder International Selection Fund is referred to as Schroder ISF

** Remove from final presentation **

Source: Schroders, as at 30 September 2015

*As at 31 December 2015

Bermuda Cayman Islands Mexico City New York Philadelphia

Amsterdam Copenhagen Frankfurt Geneva Gibraltar Guernsey Jersey London Luxembourg

Madrid Milan Paris Rome Stockholm Zurich

Beijing Hong Kong Jakarta Seoul Shanghai Singapore Sydney Taipei Tokyo

Buenos Aires São Paulo Chile

Dubai

(Investment offices in blue)

Independent

Established in 1804

Schroder family controls 48%* of voting equity

Stable

Strong balance sheet and stable ownership

structure

We can invest in our business through the market

cycle

Focused

Asset management is our sole business

We have no conflicts of interest

Able to support you

Global investment resources

€400.0bn AUM across the major asset classes

Schroders’ offices

Schroders Organisational strengths

1


€400.0bn total AUM* €102.9bn fixed income division AUM**

Schroders fixed income Funds under management

2

Source: Schroders. *Data represents AUM by product sold. **Data represents AUM by investment desk. ^Other includes Convertibles, Insurance Linked, and Alternative Rates

Strategies. The charts may not add to 100% due to rounding.

30 September 2015 30 September 2015


Schroders European credit Your investment team – integrated investment and research

3

**Includes municipals, securitised, insurance-linked and convertibles. ***London-based resources only. ****London and Zurich-based resources only.

Source: Schroders, as at 31 January 2016.

Financials Communications Utilities Industrials Quantitative Strategy

Robert Kendrick

Sam Tomlinson

Stephen Hunnisett

Patrick McCullagh Charlotte Peat

Dan Pearson

Carter Holloran

Bartek Pastwa

Rhys Thomas

Alex Stephansen

Rajeev Shah

Szevak Nszdejan

Yow Tzu Lim

Sterling Credit Euro Credit High Yield Global Credit

Alix Stewart Patrick Vogel Konstantin Leidman

Peter Harvey

Michael Scott

Lucette Yvernault

Jonathan Golan, Martin Coucke

Specialist Fixed Income Portfolio Management Teams

(no. portfolio managers)

Specialist Analyst Teams

(no. analysts)

Specialist Product Team

(no. specialists)

Credit Rates EMD Extended

sectors **

European

Credit

North

American

Credit

Asia, Australia

& EMD Credit

Quant,

Strategy &

Economy***

Portfolio-

specific**** Multi-Sector Credit

15 24 8 10 11 14 12 14 6 5 5


Schroders: Diversified capabilities Local expertise delivered globally

4

Source: Schroders, as at 31 December 2015

Equities

Asia/Pan Pacific

Emerging Markets

European

Global/International

Japan

Large, Mid and

Small Cap

Other sector/single

country specialist

QEP

Single country

UK

US

Value, Growth

EMD and

Commodities

Emerging Market Debt –

Absolute Return

Global Currency

Private Equity

Multi-Asset

GAIA

(Global Alternative

Investor Access

Global Balanced

Hedge Funds – FoF

and single strategy

Multi-Manager

Regional Balanced

Structured Products

Tailored Benchmark

Fixed Income

Asian

Corporate, High Yield

Discretionary Money

Management

Duration specific

Emerging Market Debt

– Relative Return

European

Global

Government,

Aggregate

Index Linked

Insurance-Linked

Securities

Other specialist/single

country

UK

US

Property – UK

and Global

Schroders offices

Bermuda Cayman Islands Mexico City New York Philadelphia

Amsterdam Copenhagen Frankfurt Geneva Gibraltar Guernsey Jersey London Luxembourg

Madrid Milan Paris Rome Stockholm Zurich

Beijing Hong Kong Jakarta Seoul Shanghai Singapore Sydney Taipei Tokyo

Buenos Aires São Paulo Chile

Dubai

(Investment offices in blue)


Aim: Continue to be the superior information ratio provider in credit

Why Schroders for European Credit?

Strong consistent track record through bull and bear markets

Integrated global investment framework that maximises skills from the global fixed income group

and beyond (e.g. macro, EMD, quant, equity team etc.)

Credit research fully aligned to credit investment process

Innovative themes-based research and investment approach

5


A common approach applied across credit strategies

6

ISF EURO

Corporate

ISF EURO

Credit

Conviction

ISF EURO

High Yield

All

Maturities

Corporate

Bond

Long Dated

Corporate

Bond

ISF EURO

Credit

Absolute

Return

ISF

Strategic

Credit

Monthly

High Income

ISF Global

Multi Credit Credit Value

Type Benchmark

Relative

Benchmark

Relative

Benchmark

Relative

Benchmark

Relative

Benchmark

Relative

Absolute

Return

Absolute

Return Total Return Total Return Total Return

Objective

BM +100bp

p.a. gross

over a cycle

BM +200bp

p.a. gross

over a cycle

BM +150bp

p.a. gross

over a cycle

BM +75bp

p.a. gross

over a cycle

BM+75bp

p.a. gross

over a cycle

Euribor +3%

p.a. gross

T-Bills +3%

p.a. gross

over a cycle

1st Quartile

Peer Group

Returns

Ref BM

+3-4% p.a.

(L+5%)

gross over a

cycle

7-9% total

return p.a.

over the

cycle

Benchmark BoAML Euro

Corporate

iBoxx Euro

Corporate

BBB

BoA Merrill

Lynch Euro

High Yield

Constrained

Index – HEC0

BoAML

Sterling

Non-Gilts

All Stocks

BoAML

+15Yrs

Sterling

Non-Gilts

All Stocks

3m Euribor 3m UK T-Bill

Reference

only:

BoAML

European

ccy HY

Constrained

(HPC0)

Ref:

Barclays

Multiverse

ex Treasury,

A to B

Unconstrain

ed BM

agnostic

Lead Fund

Manager

Patrick Vogel

Sep 2012

Patrick Vogel

Sep 2012

Konstantin

Leidman

Nov 2012

Alix Stewart

Aug 2012

Alix Stewart

Aug 2012

Patrick

Vogel

Peter

Harvey

Apr 2006

Michael

Scott

Aug 2012

Patrick

Vogel

Konstantin

Leidman

Fund Size €6,384m €990m €240m £862m £292m €25m £1,227m £241m €100m* TBC

Inception date Jun 2000 Dec 2013 Nov 2012 Feb 2001 Jan 2001 Nov 2015 Apr 2006 Feb 2000 TBL in 2016 TBL in 2016

Source: Schroders as at 31 December 2015. ISF Global Multi Credit to be launched in H1 2016 and Credit Value in H2 2016.

* Segregated portfolio funded November 2015 to seed fund launch.

Fund range


European credit performance Our performance is competitive

7

Source: Morningstar peer groups, data as at 31 January 2016. Schroder ISF Euro Corp Bd A Acc, Schroder ISF Euro Credit Convct A Acc. Grouped by: Morningstar Category -

EAA OE EUR Corporate Bond. Schroder ISF Euro High Yield A Acc grouped by EAA OE EUR High Yield Bond.

*Euro Corporate Bond : Patrick took over managing 01/09/2012. Euro Credit Conviction: Launched 18/12/13. Euro High Yield: Launched 14/11/12.

31 January 2016

1 year 2 years (p.a.) Since current management was in

place*

Fund

Peer

Group

Ave.

Difference Quartile

Ranking Fund

Peer

Group

Ave.

Difference Quartile

Ranking Fund

Peer

Group

Ave.

Difference Quartile

Ranking

Euro Corporate Bond -0.54 -1.78 +1.24 1 3.98 2.45 +1.53 1 5.13 3.60 +1.53 1

Euro Credit

Conviction -0.61 -1.78 +1.17 1 4.41 2.45 +1.96 1 4.61 3.55 +1.06 1

Euro High Yield 1.47 -1.20 +2.67 1 3.24 1.26 +1.98 1 5.87 4.10 +1.77 1


European Credit composite performance Competitive performance across the range

8

Source: Schroders GIPS composite data to 31 January 2016. Data from the current investment team. * Euro Credit Conviction composite Incepted 31 January 2014.

Composite 1yr Excess Return 2yr Excess Return p.a. 3yr Excess Return p.a. 3yr Information Ratio

Benchmarked Strategies

Euro Corporate Bond 1.25% 1.68% 2.00% 2.70

Euro Credit Conviction 2.06% 2.52% - 2.59*

Euro High Yield 3.70% 2.13% 1.49% 1.31

Composite 1yr Return 2yr Return p.a. 3yr Return p.a. 3yr Sharpe Ratio

Unconstrained Total Return Strategies

Monthly High Income 4.51% 5.76% 7.53% 1.68

Strategic Credit 2.09% 2.62% 3.44% 1.43


Performance track record Monthly excess returns (up and down markets)

9

Up markets

Down markets

Schroders Euro Corporate Bond Composite

Process


Our approach to portfolio management

Integrated investment process

Broader team approach to investment management

Hands-on involvement with credit research

Innovative and creative evolution of the investment process

Themes-based investment style

A formalised procedure that continually reviews the process to successfully deliver performance in

varying investment environments

A balanced portfolio construction

Aiming for consistent out-performance of the market by implementing different investment themes

into the strategy

Portfolio construction focuses on building low correlated alpha sources while minimising risk

Include offsets in portfolio construction to ensure not all themes are pointing in same direction

11


Investment process overview Themes-driven process

12

Source: Schroders

Multiple Credit Investment Themes Diversified by theme

Diversified by horizon

Security selection 37 credit analysts

Fully aligned research process

Credit Strategy

Input

Credit Scorecard

• Fundamentals

• Valuations

• Systemic

• Technical

Output

Cross market relative value

Risk bias

Risk Management


Investment process Themes

Multiple, forward-looking themes diversified by style and time horizon

Regular discussion and formulation of credit themes likely to drive markets

Diversity of themes and horizons aid risk management

Recognise real value by identifying second and third order effects of themes

13

Source: Bloomberg Z-spread, Renault 3.625% 19 September 2018 was traded on issue date 11 September 2013. Updated on 8 May 2014

Illustration: Theme: Europe is going through a cyclical recovery, which will

benefit European consumers

Theme: The Yen has faced a sharp devaluation. This will benefit

Nissan, of which Renault holds a 40% stake, as exports to the US

accelerate, aided by improving consumer demand in the US

Theme: Growing US energy self-sufficiency. The shale gas

revolution is likely to switch America’s role into becoming a net energy

exporter. This will put downward pressure on petrol prices and will

boost car sales

Theme: Growing income gap. Renault has a very strong range at the

budget end of the market – Romanian manufactured Dacia – appealing

to consumers with a lower disposable income


Innovation in credit research Themes direct focus, understanding business models to pick the winners

Credit research is fully aligned with credit themes which promotes deeper

understanding of business models, and the reaction to credit themes. Forward looking

analysis focuses on understanding the 1st, 2nd and 3rd order effects of themes on

companies

14

Company

A

Company

D

Company

B

Company

E

Company

C

Asia Revenues

Internet Trade

Bank

Deleveraging

Company

F Income Gap

Ties with multiple themes: High

conviction


Investment process Credit strategy

Monthly meetings to assess top-down views on credit and identify potential changes

The output is the European credit scorecard of our views with scores of -3 to +3

– the input scorecard summarises our views for macroeconomics, corporate fundamentals, systemic risks

and technicals

– the output score summarises our top-down sector views and off benchmark markets

15

Source: Schroders, Monthly Credit Strategy Meeting, 5th August 2014

Illustration:

* - Current score (previous score)


Investment process Proprietary tools for quantitative credit and relative value analysis

Screening tool that covers 95% of global universe with over 60 statistical fields to identify

momentum or mean reversion

A two dimensional process over time horizons and across investment universes

Ability to create both market neutral strategies and take advantage of market timing

Extensive curve analysis to determine opportunity value across CDS tenor and bond maturities

Decomposition into alpha and beta adjusted performance versus index and Schroders bespoke

‘Super Sectors’

16

Source: Schroders

Illustration: Index Schroders Analyst Net 3Mnth Beta to Currrent (09-May) Z-Spread change (bp) 3 Mnth Hist 6 Mnth CDS Basis 3M Beta implied Alpha

Isin Bond Market Sector Amt (mn) Pos (mn) Rating Cntry Rec. Lev Index Sector Price Yld TW MDur TW G-Sprd G-Sprd Cntry CDS basis Z-Sprd 1D 1W 1M 3M YTD Min Max Z-Score Z-Scor RSI 3M Z-Score Vs. Index Vs. Sector

XS0763122578ABBNVX 2 5/8 03/26/19 Capital Goods 1,250 A2/A/BBB+ CH 0.3x 0.44 0.60 106.81 1.41 5.44 89 128 -7 49 -1 -6 0 -16 -15 42 63 -0.6 -1.2 42.7 0.0 -2 -7

FR0010801761ALOFP 4 09/23/14 Capital Goods 743 Baa2/BBB/NR FR 3S 1.4x 0.47 0.64 104.50 0.69 1.33 68 65 -5 37 -1 -10 -13 -28 -31 37 66 -2.2 -2.8 21.1 0.9 -14 -19

FR0010948232ALOFP 2 7/8 10/05/15 Capital Goods 500 Baa2/BBB/NR FR 3S 1.4x 0.52 0.72 104.76 0.87 2.31 83 70 21 46 -2 -7 -13 -31 -37 46 78 -1.7 -2.1 29.3 0.6 -15 -21


FR0010850701ALOFP 4 1/8 02/01/17 Capital Goods 750 Baa2/BBB/NR FR 3S 1.4x 0.73 1.01 110.25 1.29 3.47 111 85 38 72 0 -5 -10 -31 -36 71 103 -1.6 -1.9 27.7 0.5 -9 -17




XS0604462704AMCAU 4 5/8 04/16/19 Capital Goods 550 Baa2/BBB/NR AU 4MD 2.6x 0.71 0.98 116.76 1.64 5.28 111 -128 27 72 -1 -11 -9 -12 -14 72 91 -3.3 -3.3 30.8 1.2 10 2

XS0907606379AMCAU 2 3/4 03/22/23 Capital Goods 300 Baa2e/BBB/NR AU 4MD 2.6x 0.97 1.34 101.46 2.58 8.53 127 -66 19 106 0 -7 -3 106 115 32.8 -0.3

XS0302740328ATCOA 4 3/4 06/05/14 Capital Goods 340 A2/A/NR SE 0.4x 0.09 0.13 104.63 0.41 1.02 39 -37 3 10 1 -5 3 -2 -6 5 15 -0.3 -0.5 48.1 -1.1 1 0

XS0757310270ATCOA 2 5/8 03/15/19 Capital Goods 500 A2/A/NR SE 0.4x 0.37 0.51 107.21 1.33 5.42 82 3 16 42 -1 -6 1 -6 -6 35 52 -0.6 -1.1 47.1 0.1 5 1

XS0896144655ATCOA 2 1/2 02/28/23 Capital Goods 500 A2/A/NR SE 0.4x 0.50 0.70 103.62 2.09 8.62 78 38 14 57 1 -6 4 51 65 42.3 -0.2

XS0633342604CAT 2 3/4 06/06/14 Capital Goods 600 A2/A/A US 2S 0.7x 0.14 0.20 102.45 0.46 1.04 44 35 -1 15 0 -2 2 -6 -10 10 23 -0.7 -1.2 48.7 0.0 -2 -3

XS0782692510CAT 1 3/8 05/18/15 Capital Goods 600 A2/A/A US 2S 0.7x 0.21 0.28 101.53 0.61 1.97 59 38 1 24 -1 -3 2 -5 -6 15 29 -0.1 -0.5 53.1 -0.5 1 -1

FR0010804492CEIFP 3 7/8 09/23/16 Capital Goods 1,250 3.00 NR/BBB-/NR FR 3S 1.10 1.52 107.28 1.64 3.11 151 128 112 0 -6 -12 -39 -60 111 149 -1.6 -1.7 25.6 -5 -18

FR0011125442CEIFP 4 5/8 10/05/17 Capital Goods 900 2.00 NR/BBB-/NR FR 3S 1.20 1.65 111.38 1.91 3.94 162 131 124 1 -8 -13 -36 -62 123 159 -1.9 -1.6 20.0 1 -13

FR0010817452CEIFP 4 3/8 11/06/19 Capital Goods 750 2.00 NR/BBB-/NR FR 3S 1.25 1.73 112.42 2.29 5.60 167 129 129 1 -9 -14 -42 -65 128 168 -1.8 -1.6 19.4 -3 -18

FR0010941690CEIFP 3 1/2 03/22/21 Capital Goods 750 2.00 NR/BBB-/NR FR 3S 1.40 1.93 106.13 2.63 6.83 173 129 140 -2 -11 -19 -49 -62 140 187 -2.0 -2.1 14.8 -6 -22

FR0010804500CEIFP 4 7/8 09/23/24 Capital Goods 1,000 NR/BBB-/NR FR 3S 1.54 2.13 115.08 3.26 8.66 180 125 163 -1 -13 -15 -40 -62 163 201 -2.3 -1.7 19.9 8 -10

XS0640936067DE 3 1/4 06/22/16 Capital Goods 300 A2/A/NR US 3S 0.1x 0.28 0.39 107.53 0.80 2.92 70 41 -9 30 1 -2 -1 -7 -3 24 41 -0.7 -1.0 41.7 -1.0 2 -2

XS0445463887EADFP 4 5/8 08/12/16 Capital Goods 1,000 2.30 A2/A-/BBB+ NL 3S -1.6x 0.35 0.49 111.94 0.89 2.99 78 63 11 38 -1 -4 -3 -8 -6 33 48 -1.1 -1.5 38.1 -1.9 3 -1

XS0176914579EADFP 5 1/2 09/25/18 Capital Goods 500 A2/A-/BBB+ NL 3S -1.6x 0.48 0.67 121.36 1.35 4.67 91 66 29 53 -2 -5 -2 -3 -15 51 62 -1.5 -1.3 43.6 -1.5 12 7


Investment process Fundamental research

Integrated credit team aligned with investment process is a major differentiator

No sector silo approach to investment or research

Understanding business models and the relationship between issuers

Working together to understand the supply chain and revenue relationships across sectors

Identify the under-researched bond issuers that lie outside the scope of standard research

processes

17

Source: Schroders, Analyst Handbook, 5th June 2014

Illustration:

Outlook and

positioning


Summary outlook for European credit

Fundamental

European growth set to continue led by the ‘weaker’ states. Inflation expectations driven by global growth, oil and commodities

US & UK growth momentum moderating. China slowdown poses risk to global growth.

Europe is behind the US in the credit cycle

Improved Eurozone credit conditions

Volatility in yield providing better entry, volatility in spread giving more alpha opportunities

Systemic risks

China risk to the fore, ISIS needs to be monitored

EM economic fundamentals challenged

Technicals

Positioning has become more risk-averse

Flows into Euro IG space are negative so far in 2016

19


Macro Credit Clock

Source: Schroders , OECD, February 2016

20


Global Growth Europe remains on track: domestic demand and loosening policy

21


Investment grade non-financial companies

Earnings concerns?

Sources: Schroders, S&P Capital IQ, MS Research as at December 2015

Based on >€/$ 500m market cap universe ~970 European and ~ 1,600 North American non-financials companies

Earnings concerns Higher for North American companies. % of North American

companies with negative LTM EPS at a cycle high

22


IG non-financials BBB excluding energy, metals and

mining (base currency)

IG non-financials BBB excluding energy, metals and

mining (base currency)

Valuations Cross currency adjusted – € IG more attractive excl. energy, metals and mining

Source: Schroders, Barclays, Bloomberg, Data as of January 2016

Yield to Worst (%) Yield to Worst (%)

Avg life

Cro

ss C

urr

ency A

dju

ste

d

Avg life

23


Euro IG

Valuations – spread distributions Opportunities in security selection

Source: Schroders, January 2016

OAS

24

Mean

Median


Schroder ISF Euro Corporate Bond

Performance and (gross) attribution

25

Source: Schroders, gross of all fees, based on end of day market prices for benchmark comparison * 2012 since current management were in place – 01/09/12

Date Fund Return Index Return Alpha (bps) FX (bps) Rates (bps) Sovereign (bps) Credit (bps) Residual (bps)

2012* 4.38% 3.55% 83 0 3 3 58 19

2013 5.11% 2.39% 272 -1 -22 29 226 39

2014 9.91% 8.25% 165 -1 -6 58 96 17

2015 1.76% -0.43% 219 -4 1 22 188 13

Jan-15 1.49% 0.87% 62 0 1 6 54 2

Feb-15 1.22% 0.64% 58 0 2 6 51 -1

Mar-15 0.10% -0.06% 16 0 -5 0 17 6

Apr-15 -0.36% -0.49% 13 -1 0 0 12 2

May-15 -0.51% -0.43% -8 0 3 -2 -8 -1

Jun-15 -1.94% -1.92% -2 -2 6 1 -10 3

Jul-15 1.60% 1.21% 38 0 1 1 36 1

Aug-15 -0.92% -0.76% -16 0 2 1 -18 -1

Sep-15 -0.59% -0.66% 7 0 2 3 1 1

Oct-15 1.74% 1.35% 39 0 -2 1 42 -2

Nov-15 0.76% 0.69% 7 0 -3 3 7 1

Dec-15 -0.77% -0.82% 5 0 -2 1 5 1

Jan-16 0.11% 0.59% -49 0 4 2 -54 0

Total 22.84% 14.96% 788 -7 -16 128 588 95


Value in non-cyclical, non-financial subordinated bonds Orange: customer growth, maintaining market share, reducing debt

Source: Bloomberg, February 2016

26

Orange equity price vs corporate bond price Orange corporate bond price vs total debt

/ capital


Value in subordinated insurance Aviva: Robust capital position

Source: Aviva 2015 Interim Results August 2015, Bloomberg, February 2016

27

Aviva equity vs corporate bond price


Sector allocation

Schroder ISF EURO Corporate Bond Positioning

28

Source: Schroders, Bank of America Merrill Lynch. Based on un-audited data as at 29 January 2016

*Fund issuer number treats each CDS index as a single issuer and excludes the non-credit line items (Futures Fixed Income, Margin Cash Balance, SYN, Synthetic Cash Fixed

Income, Currency). **Memo: High yield bonds are also included in the other sector breakdown in the rest of the chart

The chart will not add up to 100 as it does not include futures, IRS, forwards, TRS, cash synthetic or the CDS float (non-active leg of the CDS)

Fund Benchmark

Assets under management €6.5 billion €1.8 trillion

Effective Yield 2.0% 1.3%

OAS +212 +148

Effective Duration 4.9 4.9

Number of issuers* 224 553

Average Credit Weighting BBB+ A-

Market value (%)

Hedged Currency (%MV)

GBP 7.43

USD 5.97


Schroder ISF EURO Corporate Bond Positioning in industrials

Sector allocation breakdown for industrials in the fund

29

Source: Schroders, Bank of America Merrill Lynch. Breakdown of Industrials in the fund by MLX level 3. Based on un-audited data as at 29 January 2016

Market value (%)


Schroder ISF EURO Corporate Bond Rating breakdown

30

Source: Schroders/Bank of America Merrill Lynch/Fixed Income Analytics as at 29 January 2016, Based on un-audited data

*Bank of America Merrill Lynch EMU Corporate Index (Bloomberg ticker: ER00 Index). Ratings by average of S&P, Moody’s and Fitch

The chart will not add up to 100 as it does not include futures, IRS, forwards, TRS, cash synthetic or the CDS float (non-active leg of the CDS)

Market value (%)


Schroder ISF EURO Corporate Bond Top 10 Ticker overweights and underweights by MV(%)

31

Source: Schroders FIA at 29 January 2016, Based on un-audited data. The above is for information only and is not a recommendation to buy or sell. Overweights and

underweights by market value (%) versus the benchmark (including single name CDS but excluding bunds and CDS indices)

Ticker Name Overweight (%)

T AT&T Inc +2.04

YBS Yorkshire Building Society +1.95

BKIR Bank of Ireland +1.83

ANNGR Vonovia SE +1.76

FCACAP FCA Bank SpA +1.75

HTHROW Heathrow Funding +1.52

LLOYDS Lloyds Banking Group PLC +1.38

AVLN Aviva PLC +1.36

SSELN SSE PLC +1.15

FLYFP Fonciere Lyonnaise +1.10

Ticker Name Underweight (%)

ACAFP Credit Agricole Groupe -2.17

RABOBK Rabobank -2.17

ENIIM ENI SpA -2.11

VW Volkswagen AG -1.66

BNP BNP Paribas SA -1.54

HSBC HSBC Holdings PLC -1.33

TELEFO Telefonica SA -1.23

GE General Electric Co -1.20

BFCM Credit Mutuel-CIC Group -1.02

BMW BMW -0.95

Appendix


Fund profile Schroder ISF Euro Corporate Bond

33

*This is not a complete set of fund rules and represents the typical internal, non mandatory limits under which the fund is managed

Please note that such limits may be deviated from and are subject to change without notice

Fund Managers: Patrick Vogel supported by the credit team

Peer Group: Micropal Fixed Income EUR-corporate bond

Benchmark: Bank of America Merrill Lynch EMU Corporate index (Bloomberg ticker = ER00 Index)

Aim: To consistently outperform the market, leading to competitive peer group performance over the market cycle

Style:

A fully integrated global fixed income platform combining expertise across all fixed income sectors

Top down research identifying themes driving all fixed income sectors

Multiple themes applied though credit selection into diversified credit strategies

Emphasis on disciplined and rigorous credit research

Guidelines*:

Maximum 10% in cash; maximum 20% in cash and government bonds

Maximum of 20% in total in High Yield

Maximum 20% in non Euro denominated assets

Hedged 100% to Euro

Overall portfolio duration: Benchmark +/- 2 years

Derivatives used include: currency forwards, interest rate futures, interest rate swaps,

and credit default swaps

2x limit on fund value-at-risk relative to benchmark value-at-risk (including all derivatives)

Max 50% in long risk or short risk CDS positions


This document does not constitute an offer to anyone, or a solicitation by anyone, to subscribe for shares of Schroder International Selection Fund (the “Company”). Nothing in this

document should be construed as advice and is therefore not a recommendation to buy or sell shares

Subscriptions for shares of the Company can only be made on the basis of its latest Key Investor Information Document and prospectus, together with the latest audited annual

report (and subsequent unaudited semi-annual report, if published), copies of which can be obtained, free of charge, from Schroder Investment Management (Luxembourg) S.A.

An investment in the Company entails risks, which are fully described in the prospectus

Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get the amount

originally invested

Schroders has expressed its own views and opinions in this document and these may change

This document is issued by Schroder Investment Management Ltd., 31, Gresham Street, EC2V 7QA, who is authorised and regulated by the Financial Conduct Authority. For your

security, all telephone calls are recorded

Risk Considerations

A security issuer may not be able to meet its obligations to make timely payments of interest and principal. This will affect the credit rating of those securities

The currency derivative instruments employed are subject to the risk of default by the counterparty. The unrealised gain on the transaction as well as some of the desired market

exposure may therefore be lost

The Fund’s operations depend on third parties and it may suffer disruption or loss in the event of their failure

The fund may use financial derivative instruments as part of the investment process. There is no guarantee that they will deliver the expected results

Important information

34

Euro Corporate Strategy - Schroders...Strong consistent track record through bull and bear markets...

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Transcript of Euro Corporate Strategy - Schroders...Strong consistent track record through bull and bear markets...