The move is part of a £12.2bn transfer of equity and multi-asset funds from Foreign & Colonial to Schroders that will take effect by the end of the year.
The fund has underperformed its sector by 8 per cent since the beginning of 2010, returning 28 per cent compared to 36 per cent from the ABI sector average. It is commonly used as a default fund in Friends Life company pension schemes.
Responsibility for the fund will pass to Schroders from the end of 2014. Schroders’ multi-asset team is headed by Johanna Kyrklund and comprised of over 100 investment professionals.
A spokesperson for Friends Life says: “Today’s investment strategy announcement will not impact Friends Life’s new house default fund solutions for auto-enrolment schemes, My Future.
“However some other schemes may have the FL Managed Fund as their default fund – this fund will be impacted by the change and will be managed by Schroders and/or FLI from Q4 2014.
“There may be other employers/trustees who have selected their own default fund solution for their scheme. Some of these solutions may incorporate Friends Life own branded funds which are currently managed by F&C and would be impacted by the change and will be managed by Schroders and/or FLI from Q4 2014.
Hargreaves Lansdown head of corporate research Laith Khalaf says: “We rate this team highly, though the mandate of the Friends Life Managed fund is likely to restrict how they can invest, which may make it difficult for them to outperform.
“Savers need to pay close attention to how their pension fund is doing, because performance can have a huge impact on their final pension income. Investing in a good fund rather than a poor fund can mean the difference between a comfortable retirement, and struggling to make ends meet.
“Funds like Friends Life Managed don’t stray too far from other funds in their sector in terms of where they invest. This limits their potential for outperformance. If investors want above-average returns, they need to choose a skilful manager who is able to invest according to their convictions.”
