Towards a robust, diversified portfolio
This fund aims to achieve long-term growth that consistently beats inflation.
Fund manager’s insights:
Recent political and economic developments, especially Brexit and Donald Trump winning the American presidential election, attest to the need for a robust and diversified portfolio, says Graham Tucker, fund manager of the Old Mutual Investment Group Balanced Fund.
“The Brexit vote and a Trump victory in the US elections were possible but largely unexpected events,” he says. “Positioning sharply for the expected outcome and ignoring the risk of the actual outcome could have had a detrimental effect on the value of a portfolio.”
Tucker explains that their view is that these events are a delayed impact of the global financial crisis, which has resulted in very sluggish global growth and rising inequality as central bank stimulus has helped the rich.
He expects this trend to continue into next year with several European elections on the horizon, and with volatility in markets to remain a feature. This further presents the argument for a well-diversified portfolio, says Tucker.
According to Tucker, the outlook for South Africa should improve into next year and Old Mutual sees value in local bonds, as well as local property shares. “Local property offers both an attractive yield and a growth option. The fund has been selectively gaining exposure in this area more recently.”
In terms of “assessing the investment universe”, Tucker and his team consider the price of the asset that is being bought or sold. An equally important consideration is how the macroeconomic environment is likely to affect that investment in future.
“Weighing these two factors allows us to determine which investments should be considered for inclusion in the portfolio. We then need to consider the overall risk to the portfolio of including the various assets,” says Tucker.
“While we take positions where we have a high degree of confidence in our view, we must also recognise that the future is unknowable. As such, we aim to build a robust, diversified portfolio that will deliver the required returns without taking on excessive risk.”
He says a diversified fund combines various assets in a manner “that would be expected to achieve the required return while ensuring that the investor is saved from the roller-coaster ups and downs that come with investing in a single risky asset or several highly correlated assets”.
Why finweek would consider adding it:
One of the main benefits of a balanced fund such as the Old Mutual Balanced Fund is the diversification across asset classes.
The Old Mutual Balanced Fund is ideal for investors looking for a solution that aims to consistently deliver a moderate level of real growth (i.e. growth in excess of inflation) over the medium to long term by bringing together various asset classes from across the world.