Bal­anced

The Star Late Edition - - COMPANIES -

THE start of a year is syn­ony­mous with re­flec­tion of the year that was and de­vel­op­ing of new goals and plans for the year ahead.

The same can be said for wealth-build­ing strate­gies, as an as­tute in­vestor will likely be us­ing this time to up­date in­vest­ment man­dates in or­der to en­sure that the funds in­cluded in their port­fo­lio ef­fec­tively match their spe­cific in­vest­ment ob­jec­tives.

This is ac­cord­ing to Hy­wel Ge­orge, di­rec­tor of in­vest­ments at Old Mu­tual In­vest­ment Group, who says that there is no one-size-fits-all when it comes to se­lect­ing the right fund to in­vest in, as the op­ti­mal se­lec­tion will dif­fer de­pend­ing on what the in­vestor is look­ing to achieve with their in­vest­ment.

“Each fund will have a spe­cific risk pro­file, in­vest­ment hori­zon and as­set al­lo­ca­tion, uniquely con­structed to meet dif­fer­ent in­vest­ment ob­jec­tives.

“When re­view­ing in­vest­ment plans, in­vestors should there­fore en­sure that they al­lo­cate cap­i­tal to funds that are aligned with their spe­cific in­vest­ment goals.”

Ac­cord­ing to Ge­orge, the eco­nomic and in­vest­ment en­vi­ron­ment can also im­pact an in­vestor’s risk ap­petite.

While 2016 was a tepid year in terms of growth for South Africa, 2017 is ex­pected to be bet­ter, with many of the shocks ex­pe­ri­enced over the past few years hav­ing waned, such as load shed­ding, the com­mod­ity price col­lapse and the rand slump.

He ex­plains that a fund’s risk pro­file is es­sen­tially a gauge used to match an in­vestor’s needs to their will­ing­ness and abil­ity to take risk.

“A risk pro­file is based on his­tor­i­cal per­for­mance and as­set al­lo­ca­tion, and serves as a pro­jec­tion of po­ten­tial fu­ture volatil­ity. These pro­files are clearly stated in all fact­sheets funds, rang­ing from ‘Low’ to ‘High’.”

Ge­orge says that other fac­tors for in­vestors to con­sider when se­lect­ing a fund is the type of ex­po­sure that they are seek­ing, as funds will dif­fer in terms of as­set, sec­tor and coun­try al­lo­ca­tion.

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