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2023-02-21 5:25 PM

FNB Multi Manager Property Fund review 2023

By Lethabo Ntsoane

The FNB Multi Manager Property fund is a unit trust that invests in liquid property shares, property collective investment schemes, and property loan stock. The fund size of the unit trust is R349 million, with 89.5% of the fund invested in local property.

The fund is ideal for investors seeking consistent returns with little risk. With the exception of the 2008 housing bubble, the real estate market has been relatively stable for a long time. However, with stricter regulations in place, the housing market has thrived over the years.

Although the property market is less volatile than other asset classes, it is not immune to failure. Failures can occur, resulting in the loss of the units’ capital. However, since the fund is known to recover from difficult economic periods, capital losses may be temporary.

The fund has shown significant increases from time to time, with the best performance coming in 2021, when it increased by 36.67%. Every other year has outperformed the portfolio increase, including 2012’s second best year, which had a remarkable performance of 36.54%.

The FNB multi manager property fund has flaws and has failed in the past. The worst documented reduction was a 24.99% drop in 2018.

As you can see, the fund has had its ups and downs, but on average, it has managed to generate 4.92% average earnings per unit. 

Before investing in the multi-manager property fund, read the discussion below for a more in-depth look at the fund. The fund is discussed in greater depth further down.

FNB multi-manager property fund

The FNB multi-manager property fund is a unit trust that is managed by Ashburton Fund managers. The fund’s management has been divided as follows: Sesfikile Capital manages 56.64% of the fund, and Stanlib manages 43.18% of the fund. A minimum investment of R500.00 per month is required to start investing in the FNB multi-manager property fund. 

There are, however, other ways to contribute to the fund. Ad hoc contributions are permitted if you invest at least R2,000.00 in the fund. Once-off contributions are also permitted and begin at R5,000.00. The multi-manager property fund can be invested in using any combination of all contribution methods.

There are 95 655 participatory interests in the multi-manager property fund. The total value of the fund in 2023 is R349 million. Each unit of the multi-manager property fund costs R12.02. The total available funds are invested in local real estate at 89.9%, foreign real estate at 6.33%, local cash at 3.77%, and foreign cash at 0.12%.

Investment in the FNB multi-manager property fund comes with management costs associated with managing the fund and other costs. The following are costs or fees that are involved:

Fee description Percentage
Annual Management Fee 1.15%
TER1.31%
Transaction Costs0.17%
Total investment charges 1.48%

Investment in the FNB multi-manager property fund is not regulation 28 friendly. Therefore, investments such as tax-free savings accounts are some of the only permissible investments. When investing for retirement or to preserve an existing pension or provident fund, the only way to invest in the FNB multi-manager property fund is to diversify the contributions enough so that the investment doesn’t violate Regulation 28 of the Pension Funds Act 24 of 1956. 

How the FNB multi-manager property fund works

The multi-manager property fund aims at yielding a high income while investing in real estate securities. Therefore, an investment into the FNB multi-manager property fund will be directed towards real estate, particularly real estate investments in South Africa at large. 

To get started with the FNB multi-manager property, an investment vehicle will need to be selected. An investment vehicle can be a TFSA, endowment fund, retirement annuity, preservation, or living annuity. For pension-related investments, Regulation 28 will have to be adhered to. 

A minimum contribution will have to be made. This means that a minimum of R5,000.00 once-off contribution or ad hoc contributions of R2,000.00 or monthly premiums of R500.00 will have to be made. The contribution threshold is only for the multi-manager property fund, and each fund has its own minimum contribution requirement. 

The contribution to the FNB multi-manager property fund will be used to purchase units in the fund. Each unit will be acquired at the present value, which is presently R12.48. Earnings per unit will generate interest, which will be distributed biannually.

The fund allows investors to switch funds from fund to fund. This, however, only applies to funds that are managed by FNB, which includes multi-manager funds, the Core Balanced Fund and the Horizon Series. Switching will be highly affected by the type of investment vehicle used. 

Advantages of the FNB multi-manager property fund include:

  • Investment for a longer period of 5 years or more can yield better returns on investment.
  • The fund invests in a number of real estate securities that are well managed by diverse managers.
  • The minimum required contribution to the multi-manager property fund is low.
  • Switching from the multi-manager property fund to other funds in the FNB funds spectrum is permissible.
  • The fund has a proven track record that it can provide favourable results over time.
  • The fund has managed to outperform its set benchmark since 2014.

Disadvantages of the FNB multi-manager property fund

  • Capital that is invested in the fund is not guaranteed.
  • The fees associated with investing in the fund are high considering the average returns that the fund earns.

Conclusion

The FNB multi-manager property fund has been managing real estate securities for years and has created value for clients. Investment in the product has been seen as a stable investment. However, there are times when an investment can be volatile. Investing for a period of 60 months or more has proven to create much more desirable growth since the fund manages to outperform the market over the long term. 

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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: Email: lethabo@rateweb.co.za Twitter: @NtsoaneLethabo

Tags: FNB