Since its inception in 2007, the FNB multi-manager income fund has been thriving. Year after year, the unit trust has outperformed its benchmark and this is due to the fund’s well-diversified managers.
When compared to other funds administered by FNB, the unit trust is one of the largest in terms of fund value. The fund invests in a variety of asset classes both locally and internationally, with South African bonds accounting for the majority of its holdings.
The fund is based in South Africa and it is a holder of foreign currency or cash. This is done for investment purposes to allow for diversification. Diversification of investments is accomplished solely through the allocation of multi-manager funds.
The fund is managed by four managers and has consistently outperformed the benchmark. When investing in the FNB multi-manager income fund, one must select an investment vehicle.
The FNB multi-manager income fund complies with Regulation 28, it is permissible to invest for pension purposes. As a result, contributions from a retirement annuity, endowment fund, or preservation fund are encouraged.
The FNB multi-manager income fund is a versatile fund and differs from the range of funds offered by FNB. To get a greater understanding of the fund, read further for a detailed analysis of the fund. The FNB multi-manager income fund is discussed in greater detail below.
FNB multi-manager income fund summary
The FNB multi manager income fund is a unit trust with a fund size of R1.4 billion and a unit price of R12.10 per unit. The fund’s benchmark is the CPI + 1% (over a rolling 1 to 2 year period).
A minimum debit order contribution of R500.00 is required to invest with the FNB multi manager income fund. Contributions, on the other hand, can be made once for a minimum of R5,000.00 or ad hoc for a minimum of R2,000.00.
The FNB multi manager income fund is a multi manager fund managed by the fund managers listed below.
- Prescient Investment Management, which is allocated 30.78% of the fund,
- Ashburton Fund Managers, which is allocated 30.78% of the fund,
- Abex investments, which are allocated 19.12% of the fund, and
- Coronation fund managers, manage 19.12% of the fund.
The fund invests in a number of assets both locally and abroad. The assets that the FNB multi-manager income fund invests in include:
| # | Asset Description | Portfolio % |
|---|---|---|
| 1 | Local bonds | 64.95% |
| 2 | Local cash | 22.59% |
| 3 | Foreign bonds | 9.31% |
| 4 | Local equities | 1.86% |
| 5 | Foreign equities | 1.17% |
| 6 | Local property | 1.06% |
| 7 | Foreign property | 0.11% |
| 8 | Local other investments | 0.17% |
| 9 | Foreign cash investments | 0.87% |
How the FNB multi-manager income fund works
The FNB multi-manager income fund aims to outperform typical money market or pure income funds in terms of returns. It invests in a variety of local and global asset classes to provide a high level of income. This product is appropriate for those looking to invest in the short, medium, or long term.
To get started with the FNB multi-manager income fund, one has to choose an investment vehicle. An investment vehicle can be either a tax-free savings account, an endowment fund, a retirement annuity, a living annuity, or a preservation fund. After choosing an investment vehicle, one has to choose the frequency of contributions to be made and how much will have to be apportioned to the FNB multi-manager income fund.
The contribution to the fund will depend on the type of contribution frequency chosen, which includes once-off, ad hoc and monthly. The money apportioned into the FNB multi-manager income will be used to purchase units from the fund. Interest will be earned on the units based on the fund’s performance. Interest is then distributed to the units as per earnings.
The fund allows for the switching of funds from one fund to another. For example, money invested can be transferred from the FNB multi-manager income fund to the FNB multi-manager bond fund. However, this should be one with caution. Additionally, the type of investment made is likely to have an impact on the funds that one can choose to invest in; for example, if the investment was made through a preservation fund, switching to funds that permit such investments should be made.
Advantages of the FNB multi-manager income fund
- The minimum monthly contributions are low and affordable.
- The fund has been in existence for a longer period of time and has a proven track record.
- A multi-manager income fund has a diverse management program, which enables the fund to act on its robust investment strategy.
- The cost of investing in the fund is low considering the amount of returns as per historic earnings.
- The fund is dominated by local bonds, which makes the fund Regulation 28 compliant.
- The product is suitable for any type of investor who wants to invest for the short, medium to long term.
Disadvantages of the FNB multi-manager income fund
- There is no guarantee on the capital invested which has a risk of being lost.
- The investment charges are high.
Conclusion
The FNB multi-manager income fund provides investors with a way to earn interest on their investments while investing in a number of assets locally and abroad. The fund has been able to outperform the set benchmark since 2013, and it is expected to do so again in the near future. Note that investing for a longer period in the fund is likely to yield positive returns on investment, unlike short-term investing.