The PPS Worldwide Flexible Portfolio is a unit trust that aims to outperform inflation by 6% by investing in a range of assets. The fund’s mandate requires approximately 90% of its assets to be invested in equities, with 30% to 60% of its assets allocated to offshore equities.
The Worldwide Flexible Portfolio also includes bonds. This encompasses South African stocks and bonds, as well as those issued by international governments and corporations.
Due to its asset allocation, the fund is considered aggressive. It has a significant focus on equities, which are known for their volatility. Equities make up more than 75% of the total asset allocation, making it a high-risk investment for short-term investors.
The fund recommends a minimum investment period of seven years to achieve favorable returns. Investments held for over ten years typically yield annual returns exceeding 9%.
While the fund is suitable for long-term investors, it is not appropriate for retirement investments. Its volatility disqualifies it from being eligible for retirement investments, which are regulated by the Pension Fund Act and Regulation 28. According to the regulation, pension investments must not have more than 75% exposure to equities, thereby excluding this fund.
Other investors, however, can invest in the fund without restrictions. Tax-free savings accounts, for instance, can utilize the Worldwide Flexible Portfolio along with various other investment vehicles.
The fund has demonstrated outstanding performance since its inception, consistently delivering positive returns. Let’s delve into the fund’s historical performance.
The PPS Worldwide Flexible Portfolio has stood out for its strong performance, consistently generating favorable long-term returns. Over the past seven years, the fund has achieved an average annual growth rate of 6%.
In 2015, the fund experienced significant growth, recording a 10.73% year-on-year increase. This surpasses the average yield of South African fixed deposits and also outperforms its benchmark during that period. However, it’s important to note that the fund can have less prosperous years, as not every year is equally fruitful.
In 2016, the fund’s value declined by 3.02% due to poor performance in the stocks it invests in. Nevertheless, considering the fund’s recommended investment period of 7 years, the returns during this period were still substantial.
The fund rebounded in 2017, achieving an annual average growth rate of 8.06%, representing an 11.08% increase from the previous year. In 2018, there was a slight improvement with a mere 0.78% increase.
2019 proved to be a fantastic year for the fund, delivering an increase of 13.62%, marking a 12.42% rise from the previous year. 2020 set a record for returns, with the fund growing by 16.73%, a 3.11% increase compared to the previous year.
The fund’s historical data reveals its high volatility. It experienced a month with a positive return of 56.67%, which is above average for a unit trust of its kind.
The fund’s volatility is tied to its investment choices, which we will examine further below.
The majority of the fund’s capital is allocated to equities, which represent more than 75% of the fund’s assets, including both domestic and foreign equities.
Naspers holds the largest investment share in the fund, accounting for 3.36% of the total. British American Tobacco is the second-largest holding, representing 2.26% of the portfolio.
Glencore Xstrata holds the third-largest investment position at 2.18% of the portfolio. Another notable investment is Absa Group, which accounts for 1.99% of the portfolio.
The remaining positions in the top 10 holdings of the portfolio are as follows:
The PPS Worldwide Flexible Portfolio stands out as one of the premier unit trusts in its category, consistently outperforming the market even during challenging economic conditions. The fund provides investors with the opportunity to earn high returns over an extended period, which is not always available with other investments.
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