FOORD CONSERVATIVE FUND
Readers might notice the rather inappropriate name for this fund. To many, conservative means cash or near cash. Even a high net-worth investor might consider a fund which can invest up to 60% in equity far from conservative. Perhaps Conservative Balanced would have been a preferable name.
Nonetheless, as co-manager Daryll Owen puts it, this is about as conservative a strategy as it recommends for long-term investors.
Not that Foord Conservative, run by Owen, Dave Foord and William Fraser, could be considered racy. The Foord Flexible Fund plays that role. And the conservative Fraser keeps his colleagues’ more exuberant side in check.
The largest holding in the fund, at about 17.8%, is the good old R186 government bond. A smaller allocation goes to the R2035. Like Coronation, the Foord fund invests internationally through its own funds, and it is invested equally between the Global Equity Fund and the (multiasset) International Fund. And it has a larger holding in the Newgold exchange traded fund than its competitors, at nearly 5%. The trend is working for Foord, as the gold price was up 4% in August.
The fund has a number of house favourites, such as British American Tobacco, Capital & Counties, Richemont, Aspen and BHP Billiton. Owen says the fund focuses on large-cap liquid shares and avoids higher-p:e shares such as Naspers, even though Foord holds the share in other funds. It also avoids direct gold and plat-
inum shares, which are highly volatile.
The domestic equity holding of 15.2% is substantially less than the 22.7% allocation to foreign equities. In fact, unlike many competitors, the fund is particularly light in real assets, at 43% of the total. Yet 45% of the portfolio is almost equally split between local bonds and local money market. The bond holdings have been increased recently. Owen says the elevated liquidity position provides options if volatility increases. He says the portfolio is well positioned to deliver the targeted returns over the full investment horizon.
The fund has a fee that varies from 0.5% to 1%, with each percentage point ahead of the benchmark (inflation plus 4%) giving an extra 0.1%, and every 1% of underperformance reducing it by 0.1%.
Over the past 12 months there has been underperformance, so the fee has been brought down by 0.58%.