Per­petua Bal­anced Fund, Coro­na­tion Cap­i­tal Plus, Fo­ord Con­ser­va­tive Fund, In­vestec Op­por­tu­nity Fund, Absa Bal­anced Fund

Financial Mail - Investors Monthly - - Contents - STEPHEN CRANSTON

Mod­er­ate al­lo­ca­tion equity funds are those, ac­cord­ing to Morn­ingstar, that have an al­lo­ca­tion of be­tween 35% and 65% in eq­ui­ties.

This over­laps with the As­so­ci­a­tion for Sav­ings and In­vest­ment SA (Asisa) mul­ti­as­set medium equity, but the Asisa cat­e­gory is quite small, with R48bn un­der man­age­ment, while the Morn­ingstar range of funds is wider.

Multi-as­set in­vest­ment tends to be polarised be­tween low-equity funds as in­vestors get closer to re­tire­ment, and high-equity funds through­out the time they are build­ing up re­tire­ment cap­i­tal.

But some al­lot­ment to a mod­er­ate al­lo­ca­tion fund makes sense. Take the Coro­na­tion Cap­i­tal Plus fund, which has a larger risk bud­get than its Bal­anced De­fen­sive fund but, un­like the Bal­anced Plus fund, fo­cuses on ab­so­lute re­turns.

For many peo­ple, Cap­i­tal Plus will be a more ap­pro­pri­ate choice when they pur­chase a liv­ing an­nu­ity than Bal­anced De­fen­sive. Cap­i­tal Plus was ini­tially run by Louis Stassen, whose ideas on un­der­stand­ing the risk pro­file of each as­set class were con­sid­ered rev­o­lu­tion­ary 15 years ago. Now un­der Charles de Kock and Duane Ca­ble there is a con­ser­va­tive mind­set and less the­ory, but the ex­e­cu­tion re­mains sound. Cap­i­tal Plus still ex­hibits the Coro­na­tion DNA and acts, ex­actly as you would ex­pect, as a half­way house be­tween the low- and high-equity port­fo­lios.

In­vestec Op­por­tu­nity plays a very dif­fer­ent role in the ze­bra range. It has sim­i­lar­i­ties with the In­vestec Cau­tious Man­aged Fund, as it has the same port- fo­lio man­agers — Clyde Ros­souw and Sumesh Chetty — but it is run dif­fer­ently from In­vestec Equity, run by Chris Fre­und, and In­vestec Man­aged, run by Gail Daniel.

Op­por­tu­nity was orig­i­nally un­der Piet Viljoen, later the founder of RE:CM. It was dis­tinct from John Bic­card’s In­vestec Value fund, but there were some rel­a­tive value plays, such as gases and hos­pi­tals group Afrox and Coke bot­tler ABI. No­body had heard the word “qual­ity”, which is a pity, as it could have been mar­ket­ing gold dust.

But over the nearly 15 years in which Ros­souw has been at the helm he has pushed the qual­ity theme for this fund. It has a huge R43.4bn un­der man­age­ment, more than dou­ble the size of Cap­i­tal Plus, and is an in­ter­est­ing — dare we say out of the or­di­nary — fund.

Absa As­set Man­age­ment def­i­nitely punches be­low its weight. Per­haps when de­faults are in­tro­duced some funds will pick the solid Bal­anced fund, with about R2.5bn un­der man­age­ment to­day, or the more ag­gres­sive Man­aged Fund, with less than R200m.

It will be an uphill bat­tle for fund CEO Ann Leep­ile to take on Coro­na­tion and In­vestec, but she has the troops in place. Kurt Benn, the co-man­ager of the Absa Bal­anced fund, knows his way around bou­tiques, hav­ing been at BOE, San­lam In­vest­ment Man­age­ment and Cadiz. Some will be won­der­ing about the ef­fect of Er­rol Shear’s move to Sas­fin, but that is con­fined largely to the Ab­so­lute fund and hasn’t fa­tally af­fected

Some will be won­der­ing about the ef­fect of Er­rol Shear’s move to Sas­fin, but that is con­fined largely to the Ab­so­lute fund and hasn’t fa­tally af­fected the bal­anced funds

the bal­anced funds.

Fo­ord is a very strong force in the high- and low-equity space, though its most ex­cit­ing prod­uct has to be its Flex­i­ble fund. It was a mar­ket­ing mis­take to call its mod­er­ate fund Fo­ord Con­ser­va­tive. It should have re­ceived more than R1.6bn. This fund has ev­ery­thing you might ex­pect from Fo­ord Bal­anced — just at a some­what lower tem­per­a­ture — and ex­clud­ing the more spec­u­la­tive shares. Fo­ord says this fund is about as con­ser­va­tive a ve­hi­cle a long-term saver should have. If you don’t want to drive at the maximum speed limit this is a good fund for you.

There are still few cred­i­ble black eco­nomic em­pow­er­ment fund man­agers that can run bal­anced port­fo­lios. An ex­cep­tion is Per­petua Bal­anced. Per­petua is a fully staffed fund man­ager, but there is no doubt that in­vestors are buy­ing the fund for just one per­son, Del­phine Goven­der. It is a good start to have 11 years at Al­lan Gray on your CV, most of it as a full equity port­fo­lio man­ager.

Goven­der has a part­ner­ship with RMI In­vest­ment Man­agers, who don’t make a habit of pick­ing tur­keys.

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