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Coronation Global Strategic USD Income ZAR feeder fund review 2022

Published by
Lethabo Ntsoane

The Coronation Global Strategic USD Income ZAR feeder fund offers investors the chance to participate in non-South African-owned assets while also investing in the ZAR. The majority of the fund’s assets are invested in income assets that are issued worldwide. The fund’s risk profile, according to Coronation, is evaluated as 2 out of 10 and is thought to be moderate.

The rating is a result of the fund’s ability to invest between 75% and 100% of its assets in income-producing assets. Bonds, money market instruments, and other debt securities are some examples of the income assets that the fund invests in. International governments, banks, and other businesses all issue these assets.

The investments made by the fund are made in low-risk assets. A portion of the fund may consist of growth assets that are thought to be aggressive. In actuality, just 25% of the fund’s assets are considered growth assets. The fund may invest in listed real estate, preferred shares, and other hybrid debt or equity securities as growth assets.

People who want to invest in a fund that can generate steady growth can use the fund given its risk standards. The fund, however, solely invests in foreign corporations and government bonds. Those who desire to generate revenue quickly may use the fund. 

Coronation encourages investors to make withdrawals from the fund after 12 months. Furthermore, the fund is deemed to be an inappropriate investment option for those who want to invest for a long-term period. This is due to the fund’s limited investment in growth assets. One can invest in the Coronation Global Opportunities Equity fund for long-term investments.

We examine the fund’s investments and its composition, including the industries it invests in below. 

Coronation Global Strategic USD Income ZAR Feeder fund summary

The Coronation Global Strategic USD Income [ZAR] feeder fund is a unit trust that invests 75% to 100% of the fund in growth assets. The fund was established on August 30th, 2013, and since then, it has increased to R1.69 billion. The fund requires an initial commitment of R5,000.00 or R500.00 per month on debit orders.

The fund is made for people who want to put money into a foreign-investing, short-term-growth fund. Given the benchmark that the fund uses, this serves as proof. The benchmark for the fund is 110 % of the Secured Overnight Financing Rate (SOFR).

The fund has consistently outperformed the chosen benchmark since it was established. It was able to increase by 72.2% and log 6.4 % growth on an annual basis. The benchmark, on the other hand, has increased by 67% and has an average annual growth rate of 6% over that time.

The fund has succeeded in exceeding its established benchmark by an average of 0.4 % annually, fulfilling its goals as a fund. Since they differ by a little percentage, the gap between the benchmark and the fund is not large. In comparison to the fund, SOFR is a little more conservative. 

However, the fund has outperformed the benchmark in terms of highs and lows. The fund has hit an all-time low of 23.2 %, whereas the benchmark has hit an all-time low of 25.6 %. The fund reached an all-time high of 53.3 %, while the benchmark reached an all-time high of 50.5 %, making their highs slightly different as well.

Thanks to its management and the techniques it uses, the fund has been able to perform so well over a short period of time. To make sure that its objective is accomplished, the fund makes investments in a variety of assets. The assets that the fund invests in are mentioned below, along with the fund’s percentage stake.

Coronation Global Strategic USD Income ZAR feeder fund asset allocation

ASSET INVESTED INPORTFOLIO PERCENTAGE
In the developed markets:61.4%
Fixed Rate Bonds42.7%
Floating Rate Bonds12.5%
Inflation Linked Bonds6.2%
In the emerging markets:17.1%
Fixed Rate Bonds11%
Floating Rate Bonds 1.7%
Inflation linked Bonds4.5%
Developed Markets (High Yield) 0.7%
Emerging Markets (High Yield) 7.1%
Convertibles5.3%
Listed Property 1.7%
ETF5.2%
Cash & Money Market1.5%

Allocation by issuer 

#Issuer TypeFund percentage
1Corporates68%
2Sovereigns27.9%
3Cash1.5%
4Multi national1%
5REITS1.7%

Most of the assets that the fund invests in have been issued by corporations and sovereigns. These corporations are mostly in the developed markets 

Here are the top issuers

Top 5 issuer exposure

#ISSUERFUND PERCENTAGE
1United States Government Treasury18.4%
2Mexican Government5.7%
3Natwest3.6%
4iShares USD Short Duration3.2%
5Apple3%

Advantages of the Coronation Global Strategic USD Income ZAR feeder fund

  • The fund has two ways to make contributions.
  • The minimum allowable contribution to the fund is low.
  • Those that want to invest for the short term can use the fund.
  • The fund invests in income assets which generate stable growth.
  • The fees charged are low.

Disadvantages of the Coronation Global Strategic USD Income ZAR feeder fund

  • The fund isn’t Regulation 28 compliant. Therefore, living annuities cannot invest in the fund.
  • Returns from the fund come with taxes.

Conclusion

The Coronation Global Strategic USD Income feeder fund provides those that want to invest for stagnant withdrawals an opportunity to grow their capital while making such withdrawals. The fund invests offshore and mainly in the developed markets. Therefore, one should be willing to take a risk to invest in offshore assets. 

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted at lethabo@rateweb.co.za

Published by
Lethabo Ntsoane
Tags: Coronation
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