The Liberty Stable Growth Fund is a unit trust designed to achieve positive long-term returns. It aims to outperform its benchmark, which is CPI + 4% over a 5-year rolling period.
Established on October 1, 2012, the Liberty Stable Growth Fund offers two variants: CorpSel and Liber. Each variant has its own fee structure, with CorpSel charging a management fee of 0.60% per year and Liber charging a fee of 1%.
Managed by Prescient Investment Management, the fund is categorized as moderately aggressive due to its investment strategy. It currently holds R6.89 billion in capital and is invested in a diversified portfolio of assets.
Being Regulation 28 compliant, the Liberty Stable Growth Fund can accept a wide range of investments. It allocates less than 75% of its portfolio to equities, making it suitable for retirement investments. Various retirement vehicles such as retirement annuities, preservation funds, and pension funds can benefit from this fund, subject to minimum contribution requirements.
The fund aims to generate high long-term returns while also protecting capital in the short term. Its appealing investment approach is underscored by an examination of historical data and a comparison with its benchmark.
Let’s delve into the performance of the Liberty Stable Growth Fund.
With a benchmark of CPI + 4%, the Liberty Stable Growth Fund sets an ambitious goal. However, the fund has not surpassed its benchmark due to its higher volatility compared to the benchmark.
Since its inception in 2018, the fund has achieved a growth rate of 45.25%, while the benchmark experienced a higher growth rate of 53.97% during the same period. Nevertheless, the fund has outperformed the inflation rate, which stood at 26.64%.
The fund’s returns are influenced by its volatility. Since inception, the fund has grown by an average of 90.43% annually and 82.64% on a monthly basis. This demonstrates its ability to grow even during periods of significant decline.
During its worst 12-month period, the fund experienced a growth rate of 8.23%, and its worst month saw a decline of 15.98%. On the other hand, the fund has also had its best 12-month period, with a growth rate of 30.47%, and its best one-month increase was 7.12%.
The Covid-19 pandemic had a substantial impact on the performance of the Liberty Stable Growth Fund, leading to negative growth in the first half of 2020. In contrast, the benchmark thrived, achieving a year-on-year increase of over 9% during the same period.
However, the fund has been gradually recovering from the shocks of the pandemic. Year to date, the fund has grown by 5.73%, outpacing the benchmark’s growth rate of 2.76%. As forecasted, the fund is expected to surpass its benchmark in 2023.
The fund’s performance is predominantly driven by its investment choices. Over the years, it has achieved its current size by investing in a diverse range of assets.
Now, let’s examine the assets that make up the fund and how it is constructed based on these assets.
The Liberty Stable Growth Fund adopts a diversified approach by investing in various assets, with bonds comprising the majority of its holdings. The fund also allocates investments to emerging markets, establishing a well-diversified portfolio that encompasses both developed and emerging market equities and bonds.
Local bonds constitute the largest proportion of the fund’s holdings, accounting for 38.80% of the portfolio. Developed market bonds also hold a significant portion, representing 10.50% of the total.
In contrast, bonds from emerging markets form the smallest proportion within the fund, contributing to only 3.60% of the total. Overall, bonds account for 52.9% of the fund, contributing to its stability due to the structured returns generated by bonds.
Equities represent the second largest holding, comprising 44.10% of the fund. The majority of equities are invested locally, accounting for 24.60% of the portfolio. Emerging market equities constitute 14.80%, while developed market equities account for 4.70%.
Additionally, the fund includes investments in local cash and real estate. Local property makes up 1.50% of the fund, while local cash represents 1.50%. The allocation of each asset is subject to changes as fund managers actively invest in different assets, capitalizing on market inefficiencies.
The Liberty Stable Growth Fund is well-suited for investors seeking long-term returns with minimal short-term risks. The fund has the potential to generate returns exceeding 7% per year, outperforming the South African inflation rate. Its Regulation 28 compliance and diversified investment approach make it an appealing choice for investors.
This website uses cookies.
