Neesa Moodley-Isaacs looks at which unit trusts take the lead based on your investment needs
With hundreds of unit trust funds to choose from, you may be at a loss as to how to decide which fund to invest in.
The quarterly PlexCrown Fund Ratings highlights those funds that showed the best performance and also ranks the fund managers based on overall performance.
The leading unit trust management companies
Coronation was the leading unit trust management company for the third consecutive quarter in June.
The investment house achieved the third highest ratings in all three broad categories – equity and real estate, interest-bearing and income, and multi-asset nonincome.
The Coronation Balanced Defensive Fund, Coronation Capital Plus Fund, Coronation Industrial Fund and Coronation Property Equity Fund were ranked top in their respective subcategories, while 16 of the company’s 19 rated funds achieved above-average ratings of four or more Plexcrowns.
Allan Gray was second. The Allan Gray Bond Fund, Allan Gray-Orbis Global Equity Feeder Fund and Allan Gray-Orbis Global Fund of Funds held the top positions in their subcategories.
The third top performing management company was Nedgroup Investments. Four of sNedgroup Investment’ funds took the honours in their respective subcategories, while 10 of the company’s 15 rated funds had above-average ratings.
The best unit trust for offshore exposure
The Allan Gray-Orbis Global Equity Feeder Fund was the best-performing fund over the last year with a total return of 62.14% and the best-performing fund over the past quarter with a total return of 16.7%.
This is a feeder fund and invests only in the Orbis Global Equity Fund, which is managed by Allan Gray’s offshore investment partner, Orbis Investment Management.
Although the fund is fully invested outside South Africa, your investment in this fund is priced and traded daily in rands.
The best unit trust for inflation beating income (dividends)
The top-performing South African general equity fund was the Marriott Dividend Growth Fund R.
This fund invests in stocks that tend to outperform over the long term and which pay out reliable dividends. Marriott looks for companies with the ability to grow their dividends regardless of economic circumstances.
These companies tend to focus on basic necessities, enjoy countrywide distribution and have strong balance sheets.
They typically fare well in both recessionary and growth phases of the economic cycle and are seldom at the mercy of a new idea, trend or fashion.
The best interest-bearing unit trust
The Allan Gray Bond Fund was the top-performing South African interest-bearing fund and is suitable for investors looking for returns in excess
of money market or cash investments, and are also prepared to accept a higher capital depreciation risk.
The fund aims to provide you with a real return over the long term and outperform the All Bond Index.
The best fund for retirement savings
Multi-asset high equity funds are usually the best type of unit trust for longer term retirement savings as they aim to provide a moderate long-term capital growth with less volatility (price movement) than a full equity unit trust.
The top performing South African multi-asset high equity fund was the Olympiad MET Managed Fund of Funds. This fund aims to give you moderate long-term capital growth with a moderate level of income.
Olympiad MET Managed Fund of Funds invests in cash as well as other unit trust funds both locally and overseas.
Investing in a unit trust
There are several advantages to investing in unit trusts, which are considered flexible and best suited for medium to long-term savings goals:
» There are no minimum investment periods;
» You can access your savings at your discretion.
But bear in mind that this means you need to exercise discipline if you are saving for a long-term goal that will stand you in good stead;
» You pay tax on the interest you earn in your personal capacity. This can be tax effective because, depending on the type of fund, the interest earned may well fall below your tax exemption on interest; and
» You can invest a single lump sum or a recurring amount each month via a debit order.
You should keep your money invested for at least three to five years to give your money time to mature and ride out market fluctuations.
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