The Investec Retirement Medium Equity Portfolio is a unit trust designed to provide long-term capital and income growth. Established on January 1, 2008, during an economic crisis, the fund has steadily increased in value.
Investors are required to contribute a minimum of R3 million to the Investec Retirement Medium Equity Portfolio, making it suitable for individuals transferring funds from an existing or closing pension or preservation fund.
Despite its focus on capital growth, the fund has a gross yield of 5.1%, and it is currently valued at R454 million. The annual management fee for the Investec Retirement Medium Equity Portfolio is 1.25%.
The fund’s investment strategy includes foreign equities and a diverse range of instruments while complying with the investment guidelines of Regulation 28 of the Pension Fund Act. Equity exposure is limited to a maximum of 75% at any time to adhere to Regulation 28 guidelines.
The Investec Retirement Medium Equity Portfolio has consistently outperformed its benchmark, the (ASISA) South African Multiple Asset Medium Equity, since inception. The fund has grown by 7.7% since its inception, compared to the benchmark’s 7.3%, indicating that the fund has outperformed the benchmark by 0.4%. An investment of R100.00 in the fund in 2008 would have grown to R304.00 by 2023, while the same investment in the benchmark would have grown to R289.00.
Although the benchmark occasionally outperforms the fund, the two are closely related in terms of performance and assets invested. The fund invests primarily in equities, with bonds accounting for 27% of the portfolio, including both domestic and international bonds.
Overall, the Investec Retirement Medium Equity Portfolio including OffShore offers an excellent opportunity for investors seeking long-term capital and income growth. Below, we examine the assets composition of the fund.
| Asset | Portfolio % |
| Offshore alternatives | 1.3 |
| Offshore property | 1.1 |
| Offshore bonds | 6.7 |
| Offshore cash and cash alternatives | 4.1 |
| Offshore equities | 12.7 |
| Domestic Alternatives | 3% |
| Domestic Property | 3.7% |
| Domestic Bonds | 21% |
| Domestic cash and cash alternatives | 8.8% |
| Domestic Equities | 37.7% |
Top 10 Holdings
The fund has managed to invest in a number of assets that have shown great performance over time. Some of the high-performing assets in which the fund is heavily invested include:
- Investec WA Core,
- R2035 Government Grant,
- Investec WA Cautious,
- R2030 Government Bond,
- Naspers Ltd,
- Anglo American Plc,
- FirstRand Ltd,
- New Gold Issuer Ltd,
- BHP Group Ltd,
- and SA Inflation Linked Bond.
Importance of Knowing Where the Fund Invests
Given that the Investec Retirement Medium Equity Portfolio including OffShore requires a minimum investment of R3 million, knowing where the fund invests your money is critical. Therefore, it is ideal to compare the results of the set benchmark as well as the fund’s performance while also investigating where the fund invests in detail.
Advantages of Investec Retirement Medium Equity Portfolio including OffShore
The Investec Retirement Medium Equity Portfolio including OffShore has the following advantages:
- The fund invests in well-balanced assets, with the total assets invested in being suitable for retirement savings.
- A reputable investment manager oversees the fund.
- The fund’s equity exposure is low, making it less volatile.
- Since its inception, the fund has outperformed its benchmark.
Disadvantages of Investec Retirement Medium Equity Portfolio including OffShore
The Investec Retirement Medium Equity Portfolio including OffShore has the following disadvantages:
- The minimum required investment is too high for most investors.
- The fund can sometimes make returns that are lesser than the South African investment rate or earnings of a fixed deposit account.
- There is no capital guarantee.
Conclusion
The Investec Retirement Medium Equity Portfolio including OffShore is an excellent retirement unit trust. The fund provides favorable long-term returns of more than 5% on average per year, which are sufficient to sustain a retirement fund or provide annuities that a pensioner can live with.
While a fund investment can be volatile and underperform from time to time, the fund will always return to a positive over a one-year period. This has been demonstrated since the fund’s inception.
