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/Jun)||6.0||4.6||2.7|
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-February and end-August 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 Global Equity Fund||Foreign assets||SG||14.0|
|Foord International Fund||Foreign assets||LU||13.9|
|RSA 10.5% (R186)||Gov bonds||ZA||9.1|
|RSA 8.0% (R2030)||Gov bonds||ZA||8.3|
|RSA 8.875% (R2035)||Gov bonds||ZA||4.5|
|RSA 8.25% (R2032)||Gov bonds||ZA||3.1|
Monthly Commentary – June 2021
- Developed (+1.4% in US dollars) and emerging (+1.3%) markets were led higher by US bourses (+2.8%) on strong economic data and vaccination rollouts—after first taking fright when the US Federal Reserve brought forward to 2023 the date by when it expected US interest rates would first rise
- Developed market bond yields declined despite US and Eurozone inflation rising faster than expectations—the Fed attributes the rise in inflation to what it thinks are transitory factors
- Oil (+8.4%) rose above $70 a barrel for the first time in two years after OPEC+ signalled strong demand amid managed supply—precious metals gold (-6.9%) and silver (-6.7%) and industrial bellwether copper (-7.6%) fell sharply on easing inflation concerns and dollar strength
- The FTSE/JSE Capped All Share Index (-2.5% in rands) was dragged lower by sharp falls in resources (-6.4%) and financials (-3.0%), with only the industrials sector (+0.4%) registering a small gain—lower commodity prices and a rampant COVID-19 third wave weighed on sentiment
- The large allocation to foreign assets contributed most to performance with the rand retracing some of its recent gains—despite some attractive domestic opportunities the managers continue to favour the global investment opportunity set and expect the rand to weaken further through the full investment cycle
- The fund’s SA equities detracted but outperformed the market index, mostly driven by the under-weight allocation to the weaker resources sector—Omnia (+10.8%) and Bidcorp (+8.1%) were the top contributors while Standard Bank (-5.9%) and FirstRand (-4.3%) detracted the most after SA was put into Adjusted Level 4 lockdown
- The All Bond Index (+1.1%) gained as the yield curve flattened with longer dated bonds outperforming—the fund’s bond allocation remains concentrated in the 3-7-year maturity bucket but the managers have been investing in longer dated instruments at the margin as relative valuations shift
- The rand (-4.0% vs the US dollar) retraced some its recent gains on dollar strength, lower commodity prices and a rampant COVID-19 third wave—while further short-term strength is possible, the unit remains structurally vulnerable longer term
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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