The Coronation SA Equity Fund has a specific investing mandate that calls for it to place all of its money in South African stocks. The fund expressly disallows equity investments in foreign countries. As a result, the portfolio is invested entirely in South African equities.
The stocks of companies with a JSE listing are purchased by the fund. Any stock for promising firms can be purchased, regardless of the stock in which the company trades. Additionally, the fund makes investments in overseas firms that are listed on the JSE.
The fund has a high level of volatility because it only invests in stocks. The fund is unsuitable for short-term investments due to its significant volatility, particularly in the short term. When it comes to risk, Coronation gives the fund an 8 out of 10. The investment has a high-risk rating.
Since the fund was only established on September 30, 2015, it is continually expanding. Since the fund is only seven years old, there isn’t much data to predict how it will perform. However, the fund advises investors to hold their investments for 10 years or more.
As a result, the fund is ideal for a long-term investor seeking returns above the rate of South African inflation. Due to its swings, it is not ideal for people who intend to invest in the short to medium term.
Despite being less concentrated than the Coronation Top 20 fund, the Coronation SA Equity Fund appears to have potential. For fund managers, investing in the fund has few limits and allows them to benefit from JSE-listed companies.
Continue reading as we analyze the fund in more detail below to gain a better grasp of it.
Coronation SA Equity Fund summary
The Coronation SA Equity Fund is a unit trust that was launched in September 2015. The FTSE/JSE Capped Shareholders Weighted All Share Index is what the fund follows. Karl Leinberger and Sarah-Jane Alexander are two of the fund’s managers; together, they guide the investment vehicle toward achieving its goals.
There are two methods to invest in the Coronation SA Equity Fund. Both lump sum contributions starting at R5,000.00 and/or monthly debit order contributions of R500.00 or more are accepted by the fund. Two distributions a year are made from the fund’s income, and they happen in March and September each year.
The fund, which solely invests in JSE-listed companies, is presently valued at R2.31 billion. A Coronation SA Equity Fund unit will cost R1.40 as of 2022. The fund invests in JSE equities using its investments. The fund currently makes investments in the following industries:
- Basic materials, which compose 24.1% of the fund,
- Industries which account for 2% of the portfolio,
- Consumer goods which account for 8% of the portfolio,
- Healthcare accounting for 1.5% of the portfolio,
- Consumer staples accounting for 2.9% of the portfolio,
- Customer service accounting for 19.6% of the fund,
- Energy which accounts for 2.9% of the fund,
- Telecommunications which accounts for 3.6% of the portfolio,
- Financials accounting for 25.2% of the portfolio,
- Technology which accounts for 8.5% of the portfolio, and derivatives, which account for 0.9% of the fund.
Other holdings include real estate, which makes up 0.1 % of the portfolio, and cash reserves, which make up 0.6%.
The fund has grown by 60.5 % since its start, outperformed by the benchmark’s growth of 77.8%. The fund’s average annual returns were 7.3% compared to the benchmark’s average annual returns of 9%. As a result, the benchmark beat the fund.
What the fund invests in has been linked to the performance of the fund. The top 10 Holdings of the Fund as of March 2022 are shown below. Keep in mind that the holdings occasionally get rebalanced.
Top 10 Holdings for the Coronation SA Equity Fund
| # | Company | Fund percentage |
| 1 | Anglo American Plc | 8.7% |
| 2 | Prosus | 6.9% |
| 3 | FirstRand limited | 6.7% |
| 4 | Glencore Xstrata Plc | 4.8% |
| 5 | Standard Bank Group Ltd | 4.3% |
| 6 | MTN group Ltd | 3.6% |
| 7 | Naspers Ltd | 3.5% |
| 8 | British American Tobacco Plc | 3.5% |
| 9 | Compagnie Financiere Richemont SA | 3.4% |
| 10 | RMI holdings | 3.3% |
How the Coronation SA Equity Fund works
The Coronation SA Equity Fund is not in compliance with Regulation 28 because it invests 99 % of its portfolio in stocks. According to Regulation 28, equity investments cannot make up more than 75% of the portfolio. Retirement investments cannot be made using the fund because it does not comply.
For those with investment vehicles that are accepted, a minimum investment will have to be made. This could be done by either a lump sum with a minimum of R5,000.00 investment or a monthly debit order with a minimum of R500.00 investment. The fund can be applied for online, on the Coronation website.
For investment purposes, the invested funds will be utilized to buy units in the fund. The number of units an investor holds will vary depending on their investment and the current unit price.
Annual fees are deducted from the fund. The most typical cost is the annual management fee, which can range from 0.75% to 2.6% and is assessed based on the fund’s performance. VAT will be added to the costs involved in making an investment in the fund.
Advantages of the Coronation SA Equity Fund
- The fund offers increases that are more than the rate of SA inflation.
- There are two methods for contributing to the fund.
- Long-term investors may have returns that are above average.
- The fund has the ability to grow more than funds that are bond concentrated.
Disadvantages of the Coronation SA Equity fund
- The fund gets outperformed by the benchmark on a regular basis.
- Retirement investments are not permissible.
- Expenses associated with running the fund can be too high.
Conclusion
A short-term investor should avoid the unpredictable Coronation SA Equity Fund because of its high risk. Instead, because the fund will provide significant returns over a lengthy investment horizon, long-term investors are more likely to profit from investing in it. For the best results, invest for at least ten years.
