NEWS AND MEDIA

Laurium Balanced Prescient Fund reaches it’s three-year milestone

Twelve-month ASISA stats as at the end of September 2018 show that 61% of net inflows in the industry went into income funds and other interest-bearing funds (R66.8bn). Low-equity multi-asset (MA) and medium-equity MA funds had net outflows, while high-equity MA funds took 22% of the net inflows (R24.2bn). Given the popularity of high-equity funds, one must ask how they have performed year-to-date, and whether they protected capital in an incredibly difficult market, where the JSE ALSI TR is down -9.4% and Capped SWIX TR is down -11.7% as at end of October 2018.

Of course, within this high-equity MA category, there is a wide dispersion of returns, with the worst performing fund down -8.2%, and the best performing up +4.1% year-to-date end October 2018. The peer group median return was -1.5%, which is much better than the equity market, so investors have protected their capital to a large extent, depending on which funds they are invested in. However, they have not generated returns to grow their capital this year.

Many advisers have done well to select good balanced funds for their clients, but o en fall short when it comes to considering the correlation of the funds they have chosen. It is very common to see the balanced funds from the larger houses being combined in portfolios for clients, where due to their signiicant size and the limited investment universe in South Africa, they are highly correlated. Advisers should consider mixing funds from boutique managers, to enhance the diversification and hence the risk-adjusted return profile for their clients… 

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