The FNB growth plus fund of funds is a highly volatile investment option that comes with high risk on investment for short and medium term investors. The fund has an investment horizon of 10 years which suggests that fluctuations over the investment period are to be expected. Given the time horizon for the investment, the FNB growth plus fund of funds is best suited for those that want to invest for a long term.
The fund was launched on 01 July 2016 and with a 10-year investment horizon, it has yet to demonstrate that it works as expected The fund is only 6 years old but hasn’t managed to outperform or match its set benchmark. Since its inception the fund has recorded an average of 6.20% increase. However, this percentage is low given that it was outperformed by its set benchmark by 3.14% which recorded an average of 9.34% increase for the same period.
The FTSE/JSE All Share Index serves as the benchmark for the FNB Growth Plus Fund of Funds. Following the FTSE/JSE All Share Index is a lofty goal, and outperforming it is another, which can be a daunting task. However, the FNB growth plus fund of funds has all the competencies to match or outperform the JSE All Share Index. Given that the fund is still in its early stages, more can still be anticipated.
The FNB growth plus fund of funds works with a number of fund managers to try to achieve its set objectives. There are 10 fund managers that work to meet the objectives of the fund. The fund is listed as a high-risk investment since it invests in very volatile investments. So far, the fund has reached 12 months with the highest decrease of 13.80% and the highest increase of 36.71% since its inception.
There is a lot to know about the growth plus fund of funds before investing in it. To have a clearer understanding of the fund, continue reading. The FNB growth plus fund of funds is discussed in greater detail below.
FNB growth plus fund of funds summary
The FNB Growth Plus fund of funds is a unit trust that is registered as high risk and has set its benchmark as FTSE/JSE All Share Index. The fund is currently valued at R42 million and has 33 448 878 participatory interests in it. Each unit is sold separately at R1.25.
The FNB Growth Plus fund of funds uses a multi-manager system to manage the fund. Currently, there are 10 investment managers that are there to ensure that the fund meets its objectives, for short, medium and long-term. The investment managers involved in the fund include:
- Passive which has been allocated 65.49% of the fund;
- Ashburton Fund Managers – Active which has been allocated 11.31% of the fund;
- Truffle Asset Management, which has been allocated 4.80% of the fund;
- Aylett & Co which has been allocated 4.28% of the fund;
- Coronation Fund Managers, which has been allocated 4.12% of the fund;
- Ninety One which has been allocated 3.47% of the fund;
- Fairtree which has been allocated 3.40% of the fund;
- Abax Investments which has been allocated 2.61% of the fund;
- Sesfikile Capital which has been allocated a smaller share of the fund, as well as Stanlib.
The fund’s main investment manager is Ashburton Fund Managers, and is responsible for setting out the investment strategy of the fund to the other investment fund managers mentioned above. The investment strategy has been set as follows: local equity investments of 50%; international investments of 30%; local property of 15%; and local fixed income of 5%.
So far, the current assets allocation have been distributed as follows:
- Local equities 47.63%,
- International equities 38.34%,
- Local property 7.45%,
- Local fixed income 5.33%,
- International fixed income 0.77%, and
- Local cash 0.47%
.International investments and local fixed income have both slightly exceeded the investment strategy forecast. However, the diversion is insignificant.
How the FNB growth plus fund of funds works
The FNB growth plus fund of funds allows different investment vehicles to invest in the fund. However, the fund is not Regulation 28 compliant. Compliance with Regulation 28 of the Pension Funds Act No. 24 of 1956 entails that investment portfolios should have local and foreign equities exposure of 75% or less.
Given the fund’s current statistics, the fund has 85.99% of equity investment holdings, surpassing the 75% threshold set by the Act. Therefore, pension-related investments cannot be accepted into the fund. These include but are not limited to retirement annuities, living annuities, and preservation investments.
However, investment in pension investment products can be blended by investing in other FNB funds. A diluted investment may enable an investor to invest in the FNB growth plus fund of funds. The fund accepts non-pension-related investments.
An investment in the fund comes with costs. The costs of investing in the FNB growth plus fund of funds are higher than what you would normally pay when investing in other funds within FNB. Fees include:
- Annual Management Fee which is billed at 1.04%,
- Total Expense Ratio which is billed at 1.35%,
- Transaction costs which are billed at 0.20%, and
- Total investment charges which are billed at 1.55%.
Advantages of the FNB Growth Plus Fund of Funds
- The fund is multi-managed and has diverse management, which helps it achieve its goals.
- Investors can contribute whatever they can afford because there is no minimum amount required for the fund.
- Switching from one fund to another is possible.
- Returns from the fund are positive in the long run.
- Those that invest for over 10 years are likely to benefit more from the fund.
Disadvantages of the FNB Growth Plus Fund of Funds
- The fund is not Regulation 28 compliant.
- Fees charged are too high.
- The investment is of high risk.
- The fund hasn’t managed to outperform its benchmark since its inception.
Conclusion
The FNB growth plus fund of funds is a dynamic investment fund that aims to achieve high earnings for investors. The fund is suitable for long term investors since it has a time horizon of 10 years and more to achieve its objectives.