Schroders reduces private equity minimum investment


MEDIA RELEASE: The minimum initial investment for the Schroder Specialist Private Equity Fund has been reduced from $500,000 to $20,000 in response to strong demand from the adviser market to invest in private equity on behalf of their clients.

The Schroder Specialist Private Equity Fund provides investors with diversified exposure to private equity in a semi-liquid structure, and access to the expertise of Schroders’ dedicated global private equity team.

The reduction comes as the fund’s Australian assets under management – which feed into the US$500 million global underlying fund – hit A$55 million.

Schroders Australia alternatives director, Claire Smith, said the fund offers retail investors the opportunity to access global private equity markets – which have a broader universe of companies than those listed on public exchanges, including many early stage and growth-orientated companies – which have traditionally been hard for retail investors to access.

“The decreased minimum investment is a further testament to our dedication to the democratisation of private assets, and is consistent with our belief that private equity is appropriate for a small component of an investor’s portfolio,” she said.

“This, coupled with the fact that we do not charge any performance fees, tackles two key historic impediments to private equity investing from retail investors.

“Private equity is currently attracting growing interest from investors due to the current environment of low interest rates and elevated listed equity market valuations.”

She added that diversification has eclipsed returns as the key reason for investment.

“With the perception by many investors that equity markets are fully priced, they are turning to the private equity asset class for diversification.

“This is an approach that will hold them in good stead, as traditionally during equity market downturns private equity has not fallen as far as listed equities.

“Investors see that private equity provides the opportunity for outperformance while also gaining a measure of protection from volatility during market downturns.”

Looking forward, she believes there are a number of sectors offering opportunities for private equity investors in 2022.

“This includes the opportunity to invest in companies set to benefit from the circular economy, from companies with good sustainability credentials, from pantry staples, to technology and healthcare.

“Geographically, China and India also represent the potential for strong future returns for private equity,” she said.

“The Schroder Specialist Private Equity Fund aims to generate an absolute return of 10 to 12 per cent, net of fees, over periods of five years and longer, which can be attractive for an investor with a long-term investment horizon.”

“While the underlying investments are illiquid private equity assets, the fund provides investors with the opportunity to access their capital on a quarterly basis (although a cap of 5% of the net asset value applies at the level of the underlying global fund), opening up the opportunity to a greater range of investors,” she said.  Investors should be aware that the liquidity of the fund is not guaranteed and there is no assurance that investors will be able to access their funds in the short term.  The fund is unlikely to be suitable for investors with a short investment timeframe or who might require urgent access to their money.

The Fund has a “Recommended” rating from both Zenith and Lonsec. It is available on BT Panorama, BT Wrap, AMP MyNorth, Macquarie Wrap, uXchange, Xplore Wealth, Hub24, and Netwealth.

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