The Investec Retirement Low Equity Portfolio is a unit trust that aims to provide long-term capital and income growth, with a minimum investment of R3 million required to get started. The fund has been in operation since July 1, 2008, and has grown to R371 million since its inception, producing positive returns from day one. The fund is managed by Investec Wealth and Investment International, who act as guardians of the money and invest it in accordance with the fund’s mandate.
Investors are required to pay a management fee of 1% annually, with a minimum fee of R10,000.00 pa. The fund complies with Regulation 28 of the Pension Fund Act, making it suitable for retirement investments, and can be used by pension, preservation, annuity, and provident funds.
The fund invests primarily in bonds, making it less volatile than a fund that invests primarily in equities. Bonds constitute more than 45% of the fund’s investments, and the fund holds its capital contributions in rands. The benchmark for the Investec Retirement Low Equity Portfolio is (ASISA) South Africa Multi Asset Low Equity, which the fund seeks to outperform or match on a year-to-year basis.
Since its inception, the fund has averaged 7.5% annual growth, matching the benchmark’s growth rate. However, the fund’s performance may occasionally outperform or underperform the benchmark. Over the last seven years, the fund has grown at a 6.1% annual rate, while the benchmark has grown at a 5.9% annual rate. During the previous seven years, the fund outperformed the benchmark. In the last ten years, the fund has had an average annual growth of 6.5%, while the benchmark has had an annual growth of 6.9%. Over a ten-year period, the benchmark outperformed the fund by 0.4%.
The fund’s performance may overlap with the benchmark’s from time to time, and the capital invested in the Investec Retirement Low Equity Portfolio will fluctuate. The volatility of the fund is influenced by the investments it makes, with the highest investments being in bonds, which are more secure than equities. A closer look at the fund and the investments it makes can help better understand it.
| Asset | Portfolio Percentage |
| Domestic Preference Shares | 4.3% |
| Domestic property | 2.6% |
| Domestic cash and cash alternatives | 9.8% |
| Domestic bonds | 48.1% |
| Domestic Equities | 30.9% |
| Domestic alternatives | 4.2% |
The Investec Retirement Low Equity Portfolio fund has invested in several equities and bonds. Below, we highlight the top 10 investment holdings of the fund:
- SA Inflation Linked Bond 2025
- R2035 Government Bond
- R2030 Government Bond
- SA Inflation Linked bond 2033
- New Gold Issuer Ltd.
- Naspers
- Anglo American Plc.
- R2037 Government Bond
- BHP Group Ltd.
- FirstRand
Advantages of Investec Retirement Low Equity Portfolio
- The fund complies with Regulation 28 and is suitable for retirement investments.
- The majority of its investments are in bonds, making it a low-risk option.
- The fund is managed by experienced and well-known fund managers.
- The management fee is reasonable, and investors can use the fund’s historical data to make informed investment decisions.
Disadvantages of Investec Retirement Low Equity Portfolio
- The minimum required investment is too high for most investors.
- The fund’s returns may sometimes be lower than the South African investment rate or earnings of a fixed deposit account.
- There is no capital guarantee.
Conclusion
The Investec Retirement Low Equity Portfolio fund offers several advantages, including favorable long-term returns and investment in more secure options like bonds. This makes it an attractive option for those investing for retirement, as it provides some assurance that their capital contribution will not be completely compromised. However, it is essential to remember that there are risks involved, and capital is not guaranteed. Given the fund’s performance over time, capital can grow through the fund in the long run.