New fund for young investors

South African unit trust investors have shown an overwhelming preference for multi-asset portfolios over the last 10 years when money invested jumped from R111.8 million to R902.5 million.

This far out-stripped any other category.

Index tracking has also become an increasingly popular investment choice, thanks to their simplicity and lower cost.

Nedgroup Investments pioneered a combination with the first balanced index tracking unit trusts in September 2009.

The Nedgroup Investments Core Diversified Fund and the Nedgroup Investments Core Guarded Fund have remained the market standard-bearers.

Nedgroup Investments this year added a third offering to its range – the Nedgroup Investments Core Accelerated Fund, which sits in the multi-asset high-equity category.

The reason for adding this new portfolio is that while the Core Diversified Fund is a high-equity option its allocation to growth assets is well below Regulation 28 limits.

It has a total equity exposure of 67.5% and a combined equity and listed property exposure of 74.5%.

Jannie Leach, the head of Core Investments at Nedgroup Investments, says this is too conservative for a young investor who has a 30 or 40 year time horizon.

“Up until about 10 years to retirement you can have 90% to 100% in growth assets,” says Leach.

The Nedgroup Investments Core Accelerated Fund’s combined equity and listed property exposure sits at 90%.

It’s equity weighting of 57.5% is more than double the Guarded fund’s 22.5%. Property exposure of 10% is double the Diversified and Guarded funds’ levels. It has just 2.5% in low-risk bonds (Diversified 7.5%; Guarded 15%) and cash (Diversified 7.5%; Guarded 30%).

The Accelerated fund also has a bigger offshore exposure, with 17.5% in foreign equities (Diversified 17%; Guarded 12.5%), 5% in listed property (2% each) and marginal exposure to foreign bonds and cash.

This makes it significantly more suitable for younger investors.