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2022-08-25 7:26 PM

FNB stable fund of funds review 2022

By Lethabo Ntsoane

The FNB stable fund of funds invests in various funds to yield positive returns for unit holders. The fund was launched on July 1st, 2016 and has operated for over 6 years to date. With no such track record that can provide the fund’s movement, regardless, the fund has managed to record favourable returns, beating inflation from year to year as a result. 

The fund’s benchmark is CPI + 2%, rolling over a 3-year period. With such an ambitious benchmark to track, the fund has managed to outperform the benchmark average. The fund’s average return has been 7.17%, which is 0.74% higher than the benchmark’s yearly average of 6.63% over the same time period. 

The FNB stable fund of funds has its highs and lows like any other fund. However, the highs have proven to be more than the lows as the fund more than ever trends to a positive. The fund has recorded a high of 20.08% for a 12 months period. The fund had the lowest 12-month run of – 2.54% and during that period it was outperformed by its set benchmark which recorded 4.06% growth. 

To achieve its objectives, the FNB stable fund of funds uses a multi-manager setup to run the fund. This helps the fund to invest strategically by allowing each managing firm to focus on specific investments. Furthermore, the fund is gigantic and a multi-manager setup has proven to be a great strategy, as the fund’s performance has always been positive. 

The FNB stable fund of funds comes with its own risks and benefits. To know more about the fund, how it works, and more, read further below. The FNB stable fund of funds is discussed below. 

FNB stable fund of funds summary

The FNB stable fund of funds is a multi-asset investment solution that is designed to optimise returns and volatility over a 3-year investment horizon. The fund’s set benchmark is CPI + 2% and aspires to not drop by 6% or more at any stage. To achieve its objectives, the fund has set up a multi-manager system to manage the unit trust

Ashburton Fund Managers has been nominated as the investment manager for the FNB stable fund of funds. As a result, the fund has delegated investment responsibility to ten investment managers. Among the investment managers are the following firms:

  1. Ashburton Fund Managers – Active which manages 50.69% of the fund;
  2. Passive which manages 33.46% of the fund;
  3. Truffle Asset Management which manages 2.76% of the fund;
  4. Aylett & Co which manages 2.38% of the fund;
  5. Coronation Fund Managers which manages 2.32% of the fund;
  6. Ninety One which manages 1.98% of the fund;
  7. Fairtree which manages 1.91% of the fund;
  8. Abax Investments which manages 1.58% of the fund;
  9. Sesfikile Capital which manages 0.09% of the fund; and
  10. Stanlib which manages 0.07% of the fund.

The fund has been strategically divided by Ashburton Fund Managers and the mandate to invest has been set as follows: local cash 30%, local fixed income 30%, local equity 20%, international 15%, and local property 5%. The current investment looks different from the investment strategy set forth. However, the numbers are not astray from the strategic asset allocation. 

The current asset allocation for the FNB stable fund of funds is  as follows:

Asset Asset allocation in percentage
Local fixed income38.02%
Local equity21.56%
Local cash19.93%
International equity12.69%
International cash4.25%
Local property2.66%
International fixed income0.88%

How the FNB stable fund of funds works

The FNB stable fund of funds combines passive and active funds using robust portfolio construction methods to achieve its outcomes. The fund has participatory interests of 1,340,391,537 and it is valued at R1.56 billion. With such a high amount of investment in cash, the fund makes use of the multi-manager system to achieve objectives. 

The fund has fees that are levied for each investment in the unit trust. The fund comes with a management fee of 0.77% which is due annually. Furthermore, the FNB stable fund of funds charges an annual fee of 0.90% for costs associated with managing and operating the investment fund. 

When transacting with the fund, fees are also charged. Fees include the buying and selling of the underlying assets or units in the fund. The transaction costs are levied at a fixed percentage of 0.08%. Investment charges are also charged on investments and are levied at 0.98%.

Investment in the FNB stable fund and funds is allowed for many types of investments. Since the fund complies with  Regulation 28, it accommodates pension investments. Therefore, investments such as retirement annuities, preservation funds, and other types of investments can be made with the FNB stable fund. 

Withdrawals from the FNB stable fund can be made at any time. However, withdrawals for pension purposes are strict and can only occur if certain criteria are met.

Advantages of the FNB stable fund of funds

  • The fund has low to moderate risk attached to it.
  • The fund has been able to outperform its benchmark since the fund’s inception.
  • There are many ways that one can invest in a stable fund of funds.
  • Retirement savings can be invested in this fund since it allows investments that are bound by Regulation 28.
  • Investment into the fund can be made in any way and there are no minimum investment criteria.
  • It’s easy to own multiple units since they are cheap.
  • The fund is multi-managed, which helps the fund perform better since fund managers can focus on what they know best.

Disadvantages of the FNB stable fund of funds

  • The capital that is invested is not guaranteed.
  • Those that invest for a short period of time, or less than 1 year, may incur losses.

Conclusion

The FNB stable fund of funds has been a winner since its inception. The fund has low to moderate risk, making it a good investment opportunity for those that are conservative. As the fund has a low risk of capital loss, in the long run, it provides gains that are favorable and that outperform its benchmark. 

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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