Schroders launches Global Emerging Market Equity Commodity Fund

Schroders has launched the Schroder ISF Global Emerging Market Equity Commodity Fund. The Fund will invest solely in emerging market commodity stocks and is designed to give investors exposure to some of the worlds fastest growing and most important commodity companies.

Schroders believe that this is the only fund of its type, giving clients an excellent additional way of gaining exposure to the commodity theme. An onshore Korean version of this fund was launched on April 8th which has already raised USD 50 million and is up around 6.7% in USD, 1.3% ahead of its benchmark.

The Fund will be managed by Allan Conway, Head of Emerging Market Equities and Robert Davy, Manager of the Schroder Global Emerging Markets Fund. The Fund aims to outperform a customised MSCI EM Commodity index by 2% gross of fees over rolling 3 year periods. The benchmark consists of the MSCI EM Energy and MSCI EM Material sectors weighted by market cap, but the fund can also invest in other commodity related companies including those engaged in agriculture. 80% of the value added is expected to come from stock selection and 20% from sector decisions.

Allan Conway, Head of Emerging Market Equities and Fund Manager said: "Demand and supply of commodities is increasingly an emerging market story. Production of commodities such as copper, aluminium and steel is increasingly coming from the developing world, whilst demand from emerging market countries, and from China and India in particular, is rising rapidly. Emerging market commodity stocks are not only attractive in terms of the long term secular demand story, but additionally they are not expensive relative to their global peers."

Neil Bridge, Head of UK Sales said: "We have already had a lot of interest in the Fund from a number of key distributors. Currently the Fund is UCITS Luxembourg based and awaiting FSA regulation. We will look to have a sterling distributor share class by the autumn. If UK IFA demand is strong enough we would also consider launching an onshore unit trust version."