Financial Mail - Investors Monthly - - Analysis: Balanced Funds -

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.

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