Strategy highlights

  • Actively managed, absolute-return investment approach, with an emphasis on capital preservation
  • A focus on security selection, asset class flexibility and simple hedging strategies – to manage risk and offer investors the potential to enjoy attractive long-term total returns
  • Flexible, transparent, single portfolio of predominantly direct investments
  • Security selection driven by bottom-up proprietary research which incorporates consideration of environmental, social and governance (ESG) risks, issues and opportunities
Find out more about our investment philosophy

Strategy profile

Objective

The strategy aims to achieve a rate of return in sterling terms that is equal to or above a minimum return from cash (SONIA (30-day compounded)) +4% per annum over five years before fees. In doing so, it aims to achieve a positive return on a rolling three-year basis (meaning a period of three years, no matter which day you start on). However, capital is in fact at risk and there is no guarantee that this will be achieved over that, or any, time period.

Performance benchmark

SONIA (30-day compounded) +4%*

Volatility

Expected to be between that of bonds and equities over the long term

Typical assets

Selective exposure to
  • Equities
  • Corporate bonds
  • Government bonds
  • Cash derivatives
Other assets via tradeable securities
  • Real estate
  • Commodities
  • Currencies
  • Infrastructure
  • Renewable energy
  • Other ‘alternative’ strategies

Literature

* Please note that on 1 October 2021, the performance benchmark for this strategy changed from 1-month GBP LIBOR +4% to SONIA (30-day compounded) +4%.
RI report Real return

Responsible investment report

Stewardship activities (voting and engagement) for the last quarter and ESG metrics.

Download Report
Retail Real Return Brochure

Brochure

More detail on the strategy’s investment brochure

Download Brochure

Investment team

Our Real Return strategy is managed by an experienced team with a wide range of backgrounds. In-house research analysts are at the core of our investment process, and our multidimensional research platform spans fundamental, thematic, ESG, quantitative, geopolitical, investigative and private-market research to promote better-informed investment decisions.

Want to find out more?

Contact us

  • Andy Warwick
    Andy Warwick

    Co-head of Real Return team

  • Aron Pataki
    Aron Pataki

    Co-head of Real Return team

  • Matthew Brown
    Matthew Brown

    Portfolio manager, Real Return team

  • Philip Shucksmith
    Philip Shucksmith

    Portfolio manager, Real Return team

  • Lars Middleton
    Lars Middleton

    Portfolio manager, Real Return team

  • Brendan Mulhern
    Brendan Mulhern

    Global strategist, Real Return team

  • Aaron Sinadjan
    Aaron Sinadjan

    Portfolio analyst, Real Return team

  • Chris King
    Chris King

    Senior portfolio analyst, Real Return team

  • Catherine Doyle
    Catherine Doyle

    Investment specialist

Insights

Video

Sustainable Real Return – quarterly outlook

Phil Shucksmith discusses why now could be an interesting time to look for the sustainable winners.
14 February 2024 Philip Shucksmith
Real Return
Video

Real Return – quarterly outlook

Aron Pataki considers the outlook for inflation and interest rates, and outlines where the team sees opportunities.
07 February 2024 Aron Pataki
Real Return outlook
Article

Real Return: our 2024 outlook

We assess the investment opportunities.
15 December 2023

Your capital may be at risk. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested.

ESG can be one of many inputs into the fundamental analysis. Newton will make investment decisions that are not based solely on ESG analysis. Other attributes of an investment may outweigh ESG analysis when making investment decisions. The way that material ESG analysis is assessed may vary depending on the asset class and strategy involved. As of September 2022, the equity investment team performs ESG analysis on equity securities prior to their recommendation. ESG analysis is not performed for all fixed-income securities. The portfolio managers may purchase equity securities that are not formally recommended and for which ESG analysis has not been performed.

Key investment risks

  • Performance aim risk: The performance aim is not a guarantee, may not be achieved and a capital loss may occur. Strategies which have a higher performance aim generally take more risk to achieve this and so have a greater potential for returns to vary significantly.
  • Currency risk: This strategy invests in international markets which means it is exposed to changes in currency rates which could affect the value of the strategy.
  • Derivatives risk: Derivatives are highly sensitive to changes in the value of the asset from which their value is derived. A small movement in the value of the underlying asset can cause a large movement in the value of the derivative. This can increase the sizes of losses and gains, causing the value of your investment to fluctuate. When using derivatives, the strategy can lose significantly more than the amount it has invested in derivatives.
  • Changes in interest rates & inflation risk: Investments in bonds/money market securities are affected by interest rates and inflation trends which may negatively affect the value of the strategy.
  • Credit ratings and unrated securities risk: Bonds with a low credit rating or unrated bonds have a greater risk of default. These investments may negatively affect the value of the strategy.
  • Credit risk: The issuer of a security held by the strategy may not pay income or repay capital to the strategy when due.
  • Emerging markets risk: Emerging Markets have additional risks due to less-developed market practices.
  • Liquidity risk: The strategy may not always find another party willing to purchase an asset that the strategy wants to sell which could impact the strategy’s ability to sell the asset or to sell the asset at its current value.
  • Shanghai-Hong Kong Stock Connect and/or the Shenzhen-Hong Kong Stock Connect (‘Stock Connect’) risk: The strategy may invest in China A shares through Stock Connect programmes. These may be subject to regulatory changes and quota limitations. An operational constraint such as a suspension in trading could negatively affect the strategy’s ability to achieve its investment objective.
  • China Interbank Bond Market and Bond Connect risk: The strategy may invest in China interbank bond market through connection between the related Mainland and Hong Kong financial infrastructure institutions. These may be subject to regulatory changes, settlement risk and quota limitations. An operational constraint such as a suspension in trading could negatively affect the strategy’s ability to achieve its investment objective.
  • CoCos risk: Contingent convertible securities (CoCos) convert from debt to equity when the issuer’s capital drops below a pre-defined level. This may result in the security converting into equities at a discounted share price, the value of the security being written down, temporarily or permanently, and/or coupon payments ceasing or being deferred.
  • Counterparty risk: The insolvency of any institutions providing services such as custody of assets or acting as a counterparty to derivatives or other contractual arrangements, may expose the strategy to financial loss.
  • Investment in infrastructure companies risk: The value of investments in Infrastructure Companies may be negatively impacted by changes in the regulatory, economic or political environment in which they operate.