Perpetua Balanced Fund, Coronation Capital Plus, Foord Conservative Fund, Investec Opportunity Fund, Absa Balanced Fund
Moderate allocation equity funds are those, according to Morningstar, that have an allocation of between 35% and 65% in equities.
This overlaps with the Association for Savings and Investment SA (Asisa) multiasset medium equity, but the Asisa category is quite small, with R48bn under management, while the Morningstar range of funds is wider.
Multi-asset investment tends to be polarised between low-equity funds as investors get closer to retirement, and high-equity funds throughout the time they are building up retirement capital.
But some allotment to a moderate allocation fund makes sense. Take the Coronation Capital Plus fund, which has a larger risk budget than its Balanced Defensive fund but, unlike the Balanced Plus fund, focuses on absolute returns.
For many people, Capital Plus will be a more appropriate choice when they purchase a living annuity than Balanced Defensive. Capital Plus was initially run by Louis Stassen, whose ideas on understanding the risk profile of each asset class were considered revolutionary 15 years ago. Now under Charles de Kock and Duane Cable there is a conservative mindset and less theory, but the execution remains sound. Capital Plus still exhibits the Coronation DNA and acts, exactly as you would expect, as a halfway house between the low- and high-equity portfolios.
Investec Opportunity plays a very different role in the zebra range. It has similarities with the Investec Cautious Managed Fund, as it has the same port- folio managers — Clyde Rossouw and Sumesh Chetty — but it is run differently from Investec Equity, run by Chris Freund, and Investec Managed, run by Gail Daniel.
Opportunity was originally under Piet Viljoen, later the founder of RE:CM. It was distinct from John Biccard’s Investec Value fund, but there were some relative value plays, such as gases and hospitals group Afrox and Coke bottler ABI. Nobody had heard the word “quality”, which is a pity, as it could have been marketing gold dust.
But over the nearly 15 years in which Rossouw has been at the helm he has pushed the quality theme for this fund. It has a huge R43.4bn under management, more than double the size of Capital Plus, and is an interesting — dare we say out of the ordinary — fund.
Absa Asset Management definitely punches below its weight. Perhaps when defaults are introduced some funds will pick the solid Balanced fund, with about R2.5bn under management today, or the more aggressive Managed Fund, with less than R200m.
It will be an uphill battle for fund CEO Ann Leepile to take on Coronation and Investec, but she has the troops in place. Kurt Benn, the co-manager of the Absa Balanced fund, knows his way around boutiques, having been at BOE, Sanlam Investment Management and Cadiz. Some will be wondering about the effect of Errol Shear’s move to Sasfin, but that is confined largely to the Absolute fund and hasn’t fatally affected
Some will be wondering about the effect of Errol Shear’s move to Sasfin, but that is confined largely to the Absolute fund and hasn’t fatally affected the balanced funds
the balanced funds.
Foord is a very strong force in the high- and low-equity space, though its most exciting product has to be its Flexible fund. It was a marketing mistake to call its moderate fund Foord Conservative. It should have received more than R1.6bn. This fund has everything you might expect from Foord Balanced — just at a somewhat lower temperature — and excluding the more speculative shares. Foord says this fund is about as conservative a vehicle a long-term saver should have. If you don’t want to drive at the maximum speed limit this is a good fund for you.
There are still few credible black economic empowerment fund managers that can run balanced portfolios. An exception is Perpetua Balanced. Perpetua is a fully staffed fund manager, but there is no doubt that investors are buying the fund for just one person, Delphine Govender. It is a good start to have 11 years at Allan Gray on your CV, most of it as a full equity portfolio manager.
Govender has a partnership with RMI Investment Managers, who don’t make a habit of picking turkeys.