FNB multi-manager bond fund review 2022

FNB multi-manager bond fund

The FNB multi-manager bond fund provides diversified exposure to the South African bond market. The fund has been running for over a decade now and has been growing ever since. The FNB multi-manager bond fund is managed by two fund managers. The fund invests nearly entirely in the South African bond market, but it also maintains a modest amount of overseas currency.  

The FNB multi-manager bond fund is suitable for investors looking to invest in the medium to short term. Investment in the fund is likely to grow annually but at a steady pace. The fund doesn’t come with any guarantees on the interest that can be earned. Instead, earnings are made directly from investments placed by the fund managers. 

The fund can be used to make different kinds of investments. The product accepts investments that are covered by Regulation 28 of the Pension Funds Act (24 of 1956). This is because the fund has 99.96% local exposure for all investments made and South African bonds account for the majority of the fund. Investment vehicles such as retirement annuities, living annuities, and preservation funds can invest in the fund. 

Furthermore, the fund can also be used to increase investment in a tax-free savings account. Money saved in a tax-free savings account can be allocated to buy units of the FNB multi-manager bond fund based on the investor’s preferences.

The FNB multi-manager bond fund has a track record of more than 15 years making it a reliable source of investment. However, before investing in the FNB multi-manager bond fund, it is important to understand what the product entails and how it works. The product is discussed in greater detail below. 

FNB multi-manager bond fund summary

The FNB multi-manager bond fund is a unit trust that invests in a number of bonds in South Africa. The fund has set the FTSE/JSE All Bond TR ZAR as its benchmark. Since its inception, the fund has managed to grow steadily and at the same rate as the FTSE/JSE All Bond TR ZAR. 

The minimum investment requirements for the FNB multi-manager bond fund vary depending on whether contributions are made on a one-time, ad hoc, or monthly basis. A one-time contribution starts at R5,000.00, ad hoc contributions start at R2,000.00, and monthly debit order contributions start at R500.00. 

Distribution of the interest earned is made bi-annually. The highest interest distribution to date is 43.55% of the cost per unit. This feat was achieved in 2021/12/31.  The current number of participants or holders of fund units is 418 685. The fund currently has a value of R172.06 million.

The FNB multi-manager bond fund comes with costs for managing the investment. The fund is managed by Ashburton Fund Managers, which distributed the management as follows: 65.92% of the fund allocated to Vunani Fund Management; and 33.91% of the fund allocated by Prescient Investment Management. 

The cost to manage the fund is as follows:

Fee description %
Annual Management Fee0.98%
Total Expense Ratio1.18%
Transaction Costs 0.01%
Total Investment Charges1.19%

How the FNB multi-manager bond fund works 

The FNB multi-manager bond fund is suitable for those looking to invest in South African bonds. However, to invest in the FNB multi-manager bond fund, an investment vehicle will have to be chosen. An investment vehicle can include a retirement annuity, a tax-free savings account, or any other investment even if it is subjected to Regulation 28 of the Pension Funds Act. 

The fund can be applied for by requesting a call back from FNB. Alternatively, those who are familiar with the FNB investment vehicles can select the fund when investing. The investment vehicle chosen must distribute the money invested in accordance with the investor’s wishes. 

Depending on the type of investment vehicle chosen, a contribution to the fund can be tax deductible for income tax purposes. Furthermore, proceeds coming from the FNB multi-manager bond fund may be tax-free. When distribution proceeds from the investment, the interest will be directed to the investment vehicle used to make the investment. 

Switching from one fund to another is permissible to anyone invested in the fund. However, switching from one fund to another will depend on the type of investment made since other funds are not regulation 28 friendly. Switching from fund to fund can happen between funds that are managed by FNB. 

Investment in the FNB multi-manager bond fund comes with costs. There is an annual management fee that is due as well as other costs for transacting and managing the fund. However, the fees will be automatically deducted from the investment. 

Advantages of the FNB multi-manager bond fund 

  • The fund is regulation 28 friendly, therefore, those that want to invest in pension funds can use the fund to invest. 
  • The fund is over 15 years old. 
  • Monthly contributions to the fund are low. 
  • The fund has managed to match its benchmark from year to year since its inception. 
  • The fund has averaged 7.35% since its inception beating the inflation rate. 
  • Charges applicable to the management of funds are not high. 

Disadvantages of the FNB multi-manager bond fund

  • Some of the capital may be lost in the short run since the fund performs in the negative from time to time. 
  • There are no capital guarantees. 

Conclusion 

The FNB multi-manager bond fund has matched its benchmark since its inception, and investors can clearly use the trend line to anticipate the future with little worry. The product is mainly for those that want to take moderate risks in return for getting moderate returns on investment. Choosing this product for annuity investment or pension preservation can be a good choice for continued growth in investment. 

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