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Coronation Global Optimum Growth ZAR feeder fund review 2022

Coronation Global Optimum Growth ZAR feeder fund

The Coronation Global Optimum Growth ZAR feeder fund invests in both emerging and developed markets and is priced in ZAR. The fund is heavily weighted toward equity investments, but it also invests in other assets. The assets in which the fund invests are listed below.

As of 2022, equity investments account for the majority of the fund, accounting for 79.1% of the fund. The fund’s investments are well calculated and highly diversified. As a result, Coronation encourages investors to commit to at least ten years of investment. This is due to the fund’s long-term investing mandate.

Through the mandate, the fund is able to operate in order to meet its objectives. Short-term investments are discouraged by the fund since the fund is aggressive and volatile. Therefore, short-term investors’ capital will be at risk. 

This is evident from the fund’s performance between January 2022 and May 2022, when it fell by 22.6%. Short-term investors who invested from January to May 2022 would have lost some of their capital after withdrawing.

Coronation assigns the fund a risk rating of 7 out of 10 and categorizes it as aggressive. However, the fund is less aggressive than a concentrated fund. For example, a fund that only invests in JSE equities. However, this fund still poses a significant risk for short-term investors, but medium-to long-term investors are better off investing in the fund. 

 Investing in the fund can provide you with significant long-term gains. Knowing the fund’s composition will assist you in determining whether the fund is appropriate for your investing objectives. We discuss the fund below to provide you with some more information about it.

Coronation Global Optimum Growth ZAR Feeder Fund summary

The Coronation Global Optimum Growth feeder fund was launched on March 15, 1999. The fund invests in both developed and developing countries around the world. To begin investing in the fund, a monthly minimum investment of R500.00 or a one-time contribution of at least R5,000.00 is required.

The fund adheres to the composite: 35% MSCI World, 35% MSCI EM, and 30% BGBA. As of 2022, the fund is worth R12.36 billion, with each unit costing R119.92. The fund’s value is exceptionally high, and in order to increase it, some of the top fund managers have been hired. Marc Talpert and Gavin Joubert are the fund’s current managers.

Coronation manages the fund, and Standard Chartered is the trustee. Since its inception, the fund has grown several times. Fees must be paid for the efforts of the fund’s managers, and they are deducted automatically each year. The annual management fee is the most common fee charged by the fund.

The fund charges a minimum of 0.85% and a maximum of 2.4% in fees. The fee structure is determined by the fund’s performance. A fee of 1% will be levied if the fund’s returns equal the benchmark. 20% of the outperformance above the benchmark is shared with the managers, up to a maximum of 2.4%. This performance is measured over a rolling 24-month period. 

Since its inception, the fund has consistently outperformed the benchmark. In this period, the fund has gained by 1423.9%, while the benchmark has increased by 1012.3%. When compared to the benchmark, the fund has a 12.5% average annual growth versus 11% for the benchmark.

The average annual growth for the fund outperformed the benchmark by 1.5%. The fund has also managed to outperform the South African inflation rate and the US inflation rate. Coronation Global Optimum Growth feeder fund outperformed the South African inflation rate by a 6.6% annual average. 

The fund has achieved its objectives over the years. To see where the fund is heading, we look at the assets that the fund invests in including the counties in which they are held. The assets and countries are shown below. 

Coronation Global Optimum Growth ZAR feeder fund asset allocation and country invested

ASSETSFUND EXPOSURE 
EQUITIES:79.1%
North America 32.3%
Europe 21.4%
Asia13.1%
South Africa 7.6%
Latin America 4.8%
COMMODITIES 2.8%
Europe2.8%
REAL ESTATE 0.4%
South Africa 0.1%
Latin America 0.1%
Europe0.1%
North America0.1%
BONDS6.4%
South Africa6.4%
CASH11.3%
USD7.6%
ZAR 0%
Other3.8%

The fund invests in a number of assets, which are held on different continents. Equities and cash dominate the fund and comprise 90.4% of the fund. These assets are the backbone of the fund and can either make or break the fund. What is good about these assets is that they involve multiple companies and currencies, which diversify the fund. 

Since the fund invests most of its portfolio in equities (79.1%). We have compiled the top 10 holdings that the fund has in equities. The list is illustrated below. 

Top 10 holdings of the Coronation Global Optimum ZAR Growth feeder fund

#Company NameFund percentage 
1JD. Com Inc Adr 4.2%
2Canadian Pacific Railway Ltd 3.8%
3Alphabet Inc3.4%
4Amazon.com Inc 3%
5Prosus Na2.6%
6Capri Holdings Ltd 2.5%
7AngloGold Ashanti – Spon AD 2.4%
8Canadian National Railway Co 2.3%
9Taiwan Semiconductor Manufac2.3%
10Microsoft Corp2.3%

Advantages of the Coronation Global [ZAR] Optimum Growth Feeder Fund

  • The fund outperforms the set benchmark from time to time. 
  • The fund is suitable for those that want to invest in ZAR across developed and developing markets. 
  • There are many markets that the fund invests in, which allows the fund to be diversified and less risky. 
  • The benchmarks followed are very ambitious and outperformed most of the time.

Disadvantages of the Coronation Global [ZAR] Optimum Feeder Growth fund 

  • Short-term investment in the fund can provide capital losses to a certain degree. 
  • There are no capital guarantees when investing in the fund and the investment is subject to the performance of the fund. 

Conclusion 

Returns from the Coronation Global Optimum Growth feeder fund are above average. The fund can produce returns that are higher than those of a fixed deposit account. A cautious investor may be put off by the fact that the capital invested is not guaranteed and choose a fixed deposit account instead, which offers less interest but a guarantee.

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