Regular income for low-risk investors
The fund is a largely domestic, high-yield, fixed income portfolio that aims to deliver a reasonable level of sustainable income and stability on capital invested.
Fund manager insights:
Investing is neither an art nor a science and should rather be approached as an engineering problem, requiring a specific solution to achieve an investment outcome, says Paul Crawford, fund manager.
“This is one of the fundamental reasons behind the intellectual depth of our Newlands-based, Fairtree Fixed Income Team [in Cape Town] that incorporates specialised quantitative and mathematical skills that complement an engineering, solution-based focus,” says Crawford.
The Fairtree Flexible Income Plus Fund (previously known as the MET Income Plus Fund) aims to consistently deliver its target return by way of careful risk management and broad diversification.
The fund is suitable for low-risk, conservative investors who require regular income from a flexible, multi-asset fixed income fund, with tolerance for some volatility of capital. According to Crawford the fund can be optimally blended with other income funds in order to create a holistic income portfolio, as a result of the low correlation of the fund within the peer group and the All Bond Index (Albi).
Obtaining desired return outcomes and “runs on the board” are core to the philosophy and process implemented in managing the fund. The broad range of instruments from the investable universe ensures a superior risk-adjusted return from the fund over time, says Crawford.
“The fund has also produced superior risk-adjusted returns when compared with the All Bond Index, and that including the Fund with Alsi [All Share Index] 40 exposure instead of traditional Albi exposure has the benefit of moving the efficient frontier curve upward and to the left – which means a higher return profile for a lower level of risk,” he explains.
Crawford says they believe that a team-based, quantitative approach to the valuation of assets, combined with cutting-edge portfolio construction techniques and risk management, help build a fund to achieve the stated objectives of superior risk-adjusted returns.
“The research process is vigorous, so that when a position is put on, no emotion need be involved, and we seek the appropriate compensation for the level of risk assumed,” according to him. “The engineering solution to an investment problem removes the ‘heart or heart bias’ when actively managing the fund.”
Why finweek would consider adding it:
The fund boasts a track record and average annualised gain of 9.51% since inception in 2013. While this is slightly lower than the benchmark’s 9.69%, it demonstrates inflation-beating returns from a low-risk investment.
The fund is also ranked first in Morningstar’s SA Multi-Asset Income category over two, three and four years to 3 June 2017. ■