Manager Research

Earlier this week, Sanlam sent out a ballot letter proposing changes to the investment policies of the Sanlam Collective Investments (SCI) Schroder Global Core Equity Feeder Fund and the SCI Schroder Global Value Feeder Fund. We do not invest in the SCI Schroder Global Core Equity Feeder Fund on behalf of clients, however, we do invest in and rate the SCI Schroder Global Value Feeder Fund. The proposed changes materially alter the investment proposition of that fund.

Where clients invest in the fund outside of model portfolios, we would recommend that they vote against the proposed ballot. Where the fund is held within model portfolios we will be proposing a change in fund allocation ahead of any mandate change in October. We provide the rationale for this below.

The Rationale Behind the Ballot

The SCI Schroder Global Value Feeder Fund is proposed to be renamed the SCI Ninety One Global Franchise Feeder Fund, with the underlying investment manager changing from Schroders to Ninety One.

While the fund will remain a global equity feeder fund within the same broad ASISA category, benchmark and risk profile, the proposed change represents a meaningful shift in the underlying investment mandate. The current Schroders strategy follows a value-oriented approach, investing in companies which have experienced setbacks in share price or profitability and where there is potential for recovery. In contrast, the Ninety One Global Franchise Fund follows a quality-focused approach, investing in high-quality businesses, often associated with established global brands and franchises.

As a result, the proposed change would involve a different underlying fund manager and investment team. It also represents a shift in investment philosophy, style and approach to portfolio construction and stock selection. Although investors would continue to have exposure to global equities and a long-term capital growth objective, the way in which those returns are pursued would be materially different under the proposed mandate.

In this note, we explain why we believe it is appropriate to replace the SCI Schroder Global Value Feeder Fund in client portfolios as a result of these proposed changes as well as broader developments within the Schroders business and the Global Value team which have somewhat reduced our confidence levels in the Schroder ISF Global Recovery Fund.

Background: Ninety One and Sanlam Deal

In late 2024 Ninety One announced that it would be buying Sanlam’s active investment management business, Sanlam Investment Management (SIM), from Sanlam. At that point we questioned how the additional assets acquired by Ninety One would be invested. One of the few funds where we felt our clients could be impacted was where they held the SCI Schroder Global Value Feeder Fund. It made little commercial sense for Ninety One to keep Schroders on as the underlying fund manager for a fund where they had effectively bought the assets from Sanlam. We therefore started a fund search process to identify a potential replacement fund if or when Ninety One decided to make a change to insource the investment management of the fund.

This means that when the deal was ratified by the Competition Commission in early 2026, we had already identified a suitable replacement fund manager and begun the fee negotiations and fund launch process, ensuring it would be ready to implement if required.

While putting the contingency plan in place we continued to engage Schroders, Ninety One and SCI on the best course of action to minimise client impact. Unfortunately, these parties were not able to agree to a solution we felt worked in our clients’ best interests. This process culminated in the ballot this week, which we received at the same time as clients, and which fundamentally alters the management of the fund. Ultimately, this set of events leads us to conclude that the best course of action is to propose a change to a more appropriate fund for clients, one where we have greater clarity on the business, investment team, process, and expected investment outcomes.

While we were working on a new fund option for risk mitigation purposes there were also concurrent changes at Schroders which further support the proposed change in fund selection.

Background: The Nuveen Acquisition of Schroders

In February 2026, Nuveen acquired Schroders in a £9.9 billion all-cash transaction, one of the largest asset-manager acquisitions in Europe, creating a combined group managing approximately $2.5 trillion. Nuveen is the investment management arm of TIAA (the Teachers Insurance and Annuity Association of America), and has agreed to purchase 100% of Schroders’ equity, with the Schroder family selling the stake it has held in the business for more than two centuries. The deal is expected to be completed in Q4 of 2026.

Schroders entered the deal off a difficult stretch. Under the previous CEO the business grew assets under management considerably, but financial performance lagged, and as a listed entity, this weighed on the share price. New leadership was appointed in 2024 to simplify the business and improve profitability, an effort that has now culminated in the sale to Nuveen, with the Schroder family realising their investment at a relatively attractive valuation.

Our view is that the transaction introduces medium-term uncertainty for investors in Schroders funds. There is relatively little overlap between Nuveen and Schroders, so large parts of the business may continue to operate as they have historically; however, the business faces an important exercise to retain key staff in the near term. In our experience, deals of this scale are highly distracting for investment teams and can lead to a dilution of value-add during and after the transition.

In addition to business changes, the Schroder ISF Global Recovery Fund, the underlying master fund of the SCI Schroder Global Value Feeder fund and the strategy we rate, had been undergoing meaningful changes to its investment team. These changes primarily relate to the departure of several founding members of the strategy, as well as various other team members, which Schroders has been navigating independently of the transaction. One of the key changes happened last year when Nick Kirrage, longstanding head of the Global Value team, left the business and was replaced internally by Simon Adler. While changes to the business and the Global Value team have been unfolding independently, we have engaged extensively with Schroders on both.

Overall, this is a relatively complex set of events. Firstly, the Schroders business will undergo meaningful change as it integrates into Nuveen following the transaction. Secondly, the Global Value team has lost several of its founding members, eroding the stability and continuity that had long defined it. Thirdly, it is Ninety One’s intention that the manager of the SCI Schroder Global Value Feeder Fund changes to a quality-oriented Ninety One team within the next few months as contained in the ballot.

Pzena Global Focused Value Fund and Feeder Fund

Our fund search has led us to conclude that the most appropriate replacement for the Schroder ISF Global Recovery Fund is the Pzena Global Focused Value Fund.

Pzena is a specialist deep-value manager with a long-established and highly consistent investment philosophy. The firm begins with the approximately 2,000 largest listed companies globally and focuses its research on the cheapest 20% of shares based on its assessment of price relative to normalised earnings. From this universe, Pzena seeks to identify businesses trading materially below its estimate of their normal earnings power, investing only where it believes the issues facing a company are temporary and fixable rather than permanent. This approach often leads the portfolio into out-of-favour sectors and companies that the broader market has discounted excessively. The philosophy has remained largely unchanged since the firm's inception in 1995 and is applied consistently across all mandates. Pzena is employee-owned, manages approximately $90 billion, and is supported by a stable and experienced investment team.

Importantly, the Pzena Global Focused Value Fund fulfils a similar role in client portfolios to the one played by the Schroder ISF Global Recovery Fund, preserving the deep-value exposure our allocation was always intended to provide. We currently rate the fund Tier 1.

Next Steps

We have taken steps to establish a feeder fund at negotiated pricing via the FundRock (previously BCI) MANCO, in much the same way that the Artisan Global Value Feeder Fund was launched and introduced to client portfolios from the start of 2025. The launch of this feeder fund is complete, and it is available on platforms giving Fundhouse portfolio clients exclusive access to the negotiated pricing on the fund. It is worth noting that we expect the Pzena feeder fund to be close to 0.3% cheaper than the Schroder feeder fund when measured on a TIC basis.

This ballot has set a timeline for implementation for Rand-based portfolios, where we would aim to have all client assets switched out of the SCI fund before the implementation date in October 2026. We would also look to replace the Schroder ISF Global Recovery Fund with Pzena in global portfolios, but this is less urgent. Clients should therefore expect a phased approach to global portfolios, where we take opportunities to reduce Schroder ISF Global Recovery as market conditions facilitate this. We are also conscious of tax implications and will endeavour to transition portfolios in the most efficient manner.

Although our confidence in the Schroder ISF Global Recovery Fund has reduced, resulting in a proposed decrease in portfolio exposure, we are not recommending a rating change at this stage from its Tier 2 rating. We believe it is prudent to assess the long-term stability and effectiveness of the combined Schroders–Nuveen entity once the integration is complete before revisiting our rating. This stance is consistent with our decision to maintain the Tier 1 rating on the Schroder ISF Global Target Return Fund.

We initiated the Schroder ISF Global Recovery Fund position in June of 2016. Schroders was a new name for most of our clients and the fund was one of the first global funds we introduced to our clients when we started providing global research and portfolios. The journey with a value fund of this nature was not always simple to navigate, particularly during the 2018 (trade wars) to 2020 (COVID) period, when market dynamics favoured high-quality companies over perceived high-risk value shares. It is pleasing to take stock after just over a decade of investment with the fund and note that it returned 10.9% in USD per year net of fees, in line with our long-term budget. In addition, it added over 1% per year above a representative value benchmark and has outperformed established industry funds like the Ninety One Global Franchise by 1.5% per year over this period. The outcome has been a good one for clients; however, we need to look forward to the next decade to ensure we can help deliver a similar outcome with a high degree of confidence, hence the intention to switch fund managers going forward.