Foord Conservative Fund
For conservative, medium-term investors in South African retirement fund products
Managed to comply with the statutory investment limits set for retirement funds in South Africa, the fund aims to provide conservative, medium-term investors with inflation-beating returns over rolling three-year periods.
FOR SOUTH AFRICAN INVESTORS
• With a conservative risk profile
• Close to or in retirement
• Seeking medium-term, inflation-beating returns
• Over time horizons of less than five years.
• From a South African retirement fund investment product (Reg 28).
|Year||Fund Return %||Benchmark Return %||SA Inflation %|
|2021 (to 30/Sep)||8.2||7.5||4.5|
CPI +4% per annum, which is applied daily using the most recently available inflation data and accordingly will be lagged on average by five to six weeks.
Shorter than five years.
2 January 2014
R50 000 lump sum or R1 000 per month
Maximum equity exposure of 60%: maximum offshore exposure of 30%; complies with pension fund investment regulations (Regulation 28).
End-March and end-September each year.
Typically more than double that of the FTSE/JSE All Share Index dividend yield. The income yield is affected by the level of performance fees accrued.
Typically a medium to low weighting in JSE shares and includes exposure to listed property, commodity securities, bonds, money market instruments and foreign assets.
Foreign asset exposure is obtained predominantly via Foord International Fund (a conservative, multi-asset class fund), sub-fund of Foord SICAV domiciled in Luxembourg and Foord Global Equity Fund (a portfolio of global shares and cash), domiciled in Singapore. Both funds are priced in US dollars.
|Risk of loss||
Medium in periods shorter than six months. Low in periods greater than one year.
|Security description||Asset class||Market||Portfolio weight %|
|Foord International Fund||Foreign assets||LU||13.9|
|Foord Global Equity Fund||Foreign assets||SG||13.4|
|RSA 10.5% (R186)||Gov bonds||ZA||9.6|
|RSA 8.0% (R2030)||Gov bonds||ZA||8.1|
|RSA 8.875% (R2035)||Gov bonds||ZA||4.3|
|RSA 8.25% (R2032)||Gov bonds||ZA||3.3|
Monthly Commentary – September 2021
- Global equities (-4.1% in US dollars) fell after seven straight months of gains—slowing global economic growth amid growing uncertainties around new COVID-19 variants, Evergrande contagion, energy supply issues in Europe and China, and global supply chain difficulties giving rise to higher inflation all dampened enthusiasm
- Developed market bond yields rose on worries that rising global inflation may not be as transitory as first believed—while Chairman Powell continues to walk a fine monetary policy line, it is becoming increasingly probable the US Fed will begin its bond tapering program within the next two months and we continue to expect a lift-off in rates sometime in 2022
- The FTSE/JSE Capped All Share Index (-3.1% in rands) was dragged lower by another sharp fall in the resources sector (-9.3%) on lower industrial and precious metals prices—industrials (-0.8%) also finished lower with financials (+1.7%) pulled up by select banks and life insurance companies
- Domestic equity was the largest contributor to fund returns with longstanding holding in Aspen (+39.5%) sharply higher and meaningful contributions from mid-cap industrial Omnia (+20.1%) and preferred bank FirstRand (+4.2%)—BHP Group (-9.2%) was the largest detractor although the fund maintains a relatively low allocation to the cyclical resource sector
- The All Bond Index (-2.1%) fell as yields across the curve moved higher in line with rising global bond yields—the core holding in the short and medium-term sector (-0.6%) outperformed as longer dated maturities suffered steeper losses
- Foreign assets (-0.2% in rands) detracted marginally with the fall in global equities offset by the weakening currency—the US S&P 500 market index hedges provided some protection while resources stocks and the fund’s Chinese holdings detracted
- The rand (-3.8% vs the US dollar) weakened on broad-based dollar strength and negative emerging market sentiment with investors now more actively positioning for a moderation of the prevailing accommodative US monetary policy and the subsequent rise in interest rates—the currency remains vulnerable as the short-term platinum group metals price terms of trade bonus starts to dissipate
The fee is a performance based fee that varies around the at-benchmark fee rate as disclosed on the fact sheet. The daily fee rate is adjusted up or down based on the portfolio’s one-year rolling return relative to that of its benchmark. Minimum fee rates apply, but no fees are levied when the annual net return falls below zero. Fees accrue in the Foord global funds as disclosed.
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