Schroder Real Return Active ETF (ASX: GROW) Posts 11.4% One-Year Pre-Fee Return, Details Current Portfolio Allocation

Investment Objective and Multi-Asset Strategy of Schroder Real Return Active ETF

The Schroder Real Return Active ETF targets a return of CPI plus 4% to 5% per annum before fees over rolling three-year periods, while aiming to reduce the frequency and magnitude of negative returns. The fund benchmarks CPI using the Reserve Bank of Australia’s Trimmed Mean, as published by the Australian Bureau of Statistics, providing a transparent and consistent performance yardstick. This positions the fund within the real return and multi-asset category, focusing on preserving and enhancing investors’ purchasing power rather than merely tracking market indices.

To meet its objective, the fund invests across three broad asset categories: growth assets, diversifying assets, and defensive assets. Growth assets—primarily shares and property securities—offer higher return potential with greater volatility, with allocations ranging from 0% to 75%. Diversifying assets, including higher-yield debt and income-focused alternatives, also have an allocation range of 0% to 75%. Defensive assets, such as investment-grade debt, cash, and equivalents, can comprise 0% to 100% of the portfolio. The fund also employs derivatives and active currency management, equipping managers with flexible tools to adapt to changing market conditions.

Portfolio Management Led by Sebastian Mullins and Adam Kibble

Managed by Sebastian Mullins since 28 February 2019 and co-managed by Adam Kibble since 1 February 2023, the Schroder Real Return Active ETF was launched on 9 August 2016 and is domiciled in Australia with the Australian dollar as its base currency. The Responsible Entity is Schroder Investment Management Australia Limited, holding an Australian Financial Services Licence (AFSL 226473) and ABN 22 000 443 274. The management team’s tenure and expertise provide important context for evaluating the fund’s consistency and performance across diverse market cycles.

Since inception, the fund has delivered a pre-fee annualised return of 6.1% and a post-fee annualised return of 5.2%, reflecting long-term compounding through multiple market environments. The fund’s distribution return since inception is 3.8% per annum, while growth return—measured price-to-price excluding reinvested distributions—is 1.5% per annum. This breakdown highlights the contribution of income and capital appreciation to total returns over the fund’s history.

Strong Recent Performance with 11.4% One-Year Pre-Fee Return

The latest monthly update reveals the Schroder Real Return Active ETF achieved a one-year pre-fee return of 11.4% and a post-fee return of 10.7%. Shorter-term returns include a one-month pre-fee return of 0.2%, three-month pre-fee return of 3.0%, and six-month pre-fee return of 3.9%. The calendar year-to-date pre-fee return is 3.9%. All 12-month returns are annualised and sourced from Morningstar, calculated NAV-to-NAV with net income reinvested and net of fees unless otherwise noted.

Over three years, the fund posted a pre-fee annualised return of 10.5% and post-fee return of 9.8%. The five-year annualised pre-fee return is 6.4% with a post-fee return of 5.6%. The fund’s three-year annualised volatility stands at 4.7%, relatively low given its multi-asset exposure, while the three-year Sharpe ratio is 1.1, based on Morningstar NAV-to-NAV data. These risk-adjusted figures are valuable for investors assessing return relative to volatility. Past performance does not guarantee future results.

Global Equity Leads Asset Allocation at 30.8%

As of the reporting date, Global Equity is the largest sector allocation within the Schroder Real Return Active ETF at 30.8%, followed by Australian Higher Yield credit at 20.1%, Global Fixed Income at 10.2%, and Australian Fixed Income at 10.1%. Cash and cash equivalents comprise 9.5%, Emerging Market Bonds 6.6%, Commodities 3.9%, Australian Equity 3.6%, Asian Credit 3.0%, Global High Yield 2.0%, and Rate Strategies 0.1%.

Regionally, North America represents the largest geographic exposure at 37.5%, with Australia close behind at 35.2%. Emerging Markets account for 10.8%, Europe 8.3%, Asia 3.7%, the United Kingdom 2.6%, and other regions combined 1.9%. The fund’s global footprint spans developed and emerging markets, with approximately 72.7% of look-through regional exposure concentrated in North America and Australia, important considerations for currency and geopolitical risk.

Top Holding: SDR AUS High Yield Credit Fund ETF at 17.7%

The fund’s top 10 holdings reveal its exposure strategy. The largest holding is the SDR AUS High Yield Credit Fund ETF at 17.7%, representing a significant allocation to Australian higher-yield credit via a Schroders-managed vehicle. The Schroder Global Core Fund ETF is second-largest at 10.2%, followed by BetaShares Australian Cash Plus Managed ETF at 8.7%, and SDR Global EQ Alpha Fund ETF at 7.5%.

Additional top holdings include BlackRock AAA CLO ETF at 6.1%, VanEck JP Morgan EM Local Currency ETF at 5.6%, iShares Core MSCI Emerging Markets ETF at 3.3%, iShares USD Asia HY Bond ETF USD at 3.0%, Invesco DB Commodity Index Tracking instrument at 2.9%, and SDR GL IG CB ACT UCITS ETF ACC USD at 2.0%. The fund’s reliance on ETFs—many managed by Schroders—reflects a fund-of-funds approach to multi-asset diversification, which investors should consider regarding fee layering and portfolio construction.

Diverse Currency Exposure with Active Currency Management

The update details the fund’s look-through currency exposure, highlighting active currency management. The largest currency exposure is categorized as "Other" at 5.0%, followed by Euro (EUR) at 4.1%, US Dollar (USD) at 4.0%, Canadian Dollar (CAD) at 1.2%, Indian Rupee (INR) at 1.0%, Taiwan Dollar (TWD) at 0.9%, Korean Won (KRW) at 0.8%, Japanese Yen (JPY) at 0.8%, South African Rand (ZAR) at 0.8%, Mexican Peso (MXN) at 0.8%, Chinese Yuan (CNY) at 0.7%, Hong Kong Dollar (HKD) at 0.6%, and British Pound (GBP) at negative 2.0%.

The negative GBP exposure indicates a short position consistent with the fund’s active currency management strategy, meaning the fund actively adjusts currency exposures rather than passively accepting underlying holdings’ currency risk. The wide range of currency exposures underscores the fund’s global diversification. Investors should be aware that currency fluctuations can impact investment values both positively and negatively, a risk explicitly noted in the fund’s disclosures.

Monthly Income Distributions and 0.690% Management Fee

The Schroder Real Return Active ETF pays monthly income distributions, appealing to investors seeking regular income from a diversified multi-asset portfolio. The management fee and costs total 0.690% per annum, with a buy/sell spread of 0.14% on purchases and redemptions. The unit NAV as of the reporting date is AUD 4.0395. There is no minimum initial investment required for on-market ETF purchases. The fund’s ISIN is AU00000GROW4 and Bloomberg ticker is GROW AU.

The update includes an illustrative chart showing the growth of a hypothetical AUD 10,000 investment from January 2022 to January 2026, though it clarifies this is for illustrative purposes only and not an actual investment return. Returns are NAV-to-NAV with net income reinvested and net of fees. Schroders and its affiliates do not guarantee capital repayment or fund performance, an important risk disclosure for investors.

Risks: Volatility, Currency, and Concentration in Schroders-Managed ETFs

Although the fund’s three-year annualised volatility of 4.7% is modest compared to pure equity funds, investors should consider specific risks. The broad asset allocation ranges—especially the 0% to 75% range in growth assets—mean the fund’s risk profile can shift significantly based on manager decisions, with no guarantee of maintaining current allocations. The use of derivatives and active currency management adds complexity and potential risks beyond headline returns.

Additionally, the fund has notable concentration in Schroders-managed ETFs, including SDR AUS High Yield Credit Fund ETF (17.7%), Schroder Global Core Fund ETF (10.2%), and SDR Global EQ Alpha Fund ETF (7.5%). Investors should evaluate potential conflicts of interest or fee layering and consult the Product Disclosure Statement for full fee details. Lastly, the diversified currency exposure, including a short GBP position, means currency fluctuations can materially influence returns in ways not immediately apparent from performance figures.

Comparing GROW’s Real Return Goal to Its Historical Performance

The fund’s stated goal is to achieve CPI plus 4% to 5% per annum before fees over rolling three-year periods. With a disclosed three-year annualised pre-fee return of 10.5% and the RBA’s Trimmed Mean CPI generally between 3% and 4% recently, the fund appears to be tracking at or above its target over the latest three-year span. However, this objective is measured over rolling periods and does not guarantee future performance at any given time.

Since its August 2016 inception, the fund has delivered a pre-fee annualised return of 6.1%, reflecting compounded results through nearly nine years encompassing multiple market cycles, including the 2020 COVID-19 disruption, the 2022-2023 interest rate hikes, and subsequent recovery. The calendar year performance chart from 2016 through 2025 shows year-to-year return variability, including at least one negative calendar year, consistent with the fund’s aim to minimise but not eliminate negative returns. Past performance is not indicative of future results, and investors should review the full Product Disclosure Statement before investing.