CORONATION CAPITAL PLUS
This fund retains the character of an absolute return fund rather than simply a medium equity fund. It has R18bn under management, and many of the clients have a large proportion of their retirement savings in it for a combination of protection and growth. If it does not produce a positive return over 24 months the fee drops from 1.4% to 0.65%. Charles de Kock, who co-manages the fund, says capital has been protected, though at a return of 4.4%/year over three years was well below the target of inflation plus 4%.
But he says it has been an environment in which multi-asset funds have battled to beat cash. So it is appropriate that the fund is managed by De Kock and Duane Cable, who also run the Balanced Defensive Fund.
Capital Plus has a limit of 60% in growth assets (equities and property) so it has a higher-risk budget than Balanced Defensive, with a 40% cap. De Kock says it is very close to its upper limit, at 59.6%. Of this, 30.4% is in domestic equity, 10.2% in domestic property, 14.5% in international equity and 1.4% in global real estate.
The fund invests in international markets through its sister funds.
The holding in the Global Emerging Markets fund is modest at 1.2%, the key route to international assets being through the Global Capital Plus fund (15.1%) and the Global Opportunities Equity Fund (9.2%). This is a fund of funds.
Coronation’s direct Global Select is still considered somewhat experimental for this fund. De Kock says that, of course, many of the “local” shares in the fund are really international businesses.
Its larger holdings include Naspers, Mondi, MTN, British American Tobacco, Capital & Counties, and Anheuser-Busch Inbev. Mediclinic and Spar were the three largest detractors to performance. De Kock says investors should be able to look forward to profits from Naspers’s numerous online classified advertising businesses, which should justify what look like crazily high valuations in the short term.
The holdings in UK-based property shares Intu, Capital & Counties and Hammerson have detracted over the past year, but De Kock says they remain good longterm investments with reasonable yields.
The fund is cautious about increasing the duration of its bonds, given the fragile state of the SA fiscus.