Key Highlights

  • The fund pursues a real return objective benchmarked against CPI plus 5.0%, using a dynamic and unconstrained multi-asset allocation approach.
  • Bonds make up the largest single Asset Class within the portfolio at 60.43%, ahead of equities at 41.90%.
  • The portfolio holds 238 underlying positions, with the ten largest allocations accounting for 84.83% of the fund.
  • Several of the fund's top holdings are other Schroder-managed vehicles, including the Schroder Australian High Yield Credit ETF and the Schroder Global Core Fund.

The Schroder Real Return Active ETF trades on the ASX under the code GROW and was admitted to the exchange on 16 August 2016. It is structured as an objective-based, multi-asset strategy that applies a dynamic, unconstrained approach to asset allocation, with the stated intention of delivering a smoother path of returns than shares while still targeting a real return relative to inflation.

The fund sits within the Multisector Flexible Morningstar category, a classification for funds that invest across a number of sectors with weightings that vary over time in pursuit of a specified return outcome, typically expressed relative to cash or inflation. The fund's benchmark is CPI plus 5.0%, and it carries a management fee of 0.69% per annum, with an ISIN of AU00000GROW4.

Asset Allocation

The portfolio's asset allocation shows bonds at 60.43%, considerably higher than the 23.95% category average, and stock at 41.90%, marginally below the category average of 43.01%. Other instruments account for 5.59% of the fund, below the 13.25% category figure.

Notably, the fund's cash allocation is recorded at negative 7.77%, compared with a category average of 20.26%. This negative position reflects the fund's use of derivative instruments, including overnight index swaps, which appear among its largest holdings and can result in an offsetting cash position within the reported asset allocation.

Sector Weightings Within Growth Assets

Within the Equity portion of the portfolio, technology carries the largest sector weighting at 24.89%, above the 14.01% category average, followed by financial services at 17.15% versus a category figure of 13.36%. Basic materials sit at 13.30%, also above the 10.46% category average.

Energy exposure is notably lower, at 3.55% against a category average of 17.29%, representing a substantial underweight relative to peer funds in the same category. Consumer cyclical exposure, at 5.57%, is likewise below the 9.86% category average. Healthcare, industrials, communication services, consumer defensive and utilities make up the remainder of the sector allocation, at 9.92%, 9.63%, 7.77%, 5.67% and 1.40% respectively.

Geographic Exposure

The United States represents the largest country exposure at 31.70%, followed closely by Australia at 29.20%. France contributes 4.72%, the Cayman Islands 3.44%, Germany 3.08%, the United Kingdom 2.89%, Canada 2.58%, China 1.83%, Switzerland 1.86% and Japan 1.76%. The Cayman Islands exposure reflects allocations to fund structures domiciled there rather than direct operating businesses.

Portfolio Holdings and Fund Structure

The fund's largest individual holding is the Schroder Australian High Yield Credit - Active ETF at 19.74%, followed by the Schroder Global Core Fund - Active ETF at 10.44% and the BetaShares Australian Cash Plus Active ETF at 10.30%. Two overnight index swap positions account for a combined 20.17% of the fund, while the Schroder Global Equity Alpha Fund - Active ETF contributes 7.72%.

Additional holdings include the iShares AAA CLO Active ETF at 4.95%, the VanEck J.P. Morgan EM Local Currency Bond ETF at 4.93%, the iShares Core MSCI Emerging Markets ETF at 3.48% and the Invesco DB Commodity Index Tracking Fund at 3.05%. In total, the portfolio holds 238 positions, with the ten largest making up 84.83% of the fund.

Conclusion

The Schroder Real Return Active ETF is structured as a multi-asset strategy that allocates dynamically across bonds, equities, cash-equivalent instruments and derivative positions in pursuit of a return objective linked to inflation. Its portfolio composition reflects a bond-heavy allocation relative to its category peers, a substantial underweight to the energy sector, and a notable use of underlying Schroder-managed funds and overnight index swaps to implement its exposures. The combination of these elements distinguishes GROW from more conventional single-asset-class or benchmark-tracking funds within the multisector flexible category.