Longterm growth with reduced risk and lower volatility

STANLIB Balanced Cautious Fund – a new investment approach for cautious investors

Hot on the heels of successfully relaunching their Dividend Income Fund, STANLIB now brings investors a new product targeting long term growth with reduced risk and lower volatility.

Investors fully exposed to the equity market would have witnessed a 23% fall in the JSE All Share Index last year. Depending on their sector weightings, they may have fared slightly better, or tragically far worse. Many quickly reacted to the plummeting markets by selling their equities at rock bottom prices, and placing all of their salvaged funds into the far more attractive and secure money market. However, tried and tested investment philosophies clearly show that holding extreme positions – either in equities or in cash – does not necessarily serve investors well over the medium to long term and a balanced approach is advised.

Even the most astute investor is now wary of volatile equity markets. But one cannot and should not avoid the equity market completely – all statistics point to this asset class offering the best return over time.

Last year’s events have left many searching for viable alternatives for capital growth in the long term, with less intensity in short term movements. The new STANLIB Balanced Cautious Fund addresses this need by offering a low equity balanced solution. The Fund invests in a variety of asset classes and is designed to deliver growth in the long term with less volatility.

Product development experts at STANLIB have identified the need for more cautious products that deliver inflation and cash-beating returns in the long run. Equities may still be the best asset class to invest in to achieve this objective, but they often offer investors too much stress to stomach in uncertain and challenging markets.

Added to that is the need many investors have today for a single solution to their investment needs. This has become increasingly difficult to identify with thousands of investment products to choose from.

Head of STANLIB’s Multi-Asset Franchise and Portfolio Manager for the new fund, Thobelani Maphumulo explains: “Many investors and advisers prefer a solutions-based one stop fund, where the tactical asset allocation, stock picking, playing of investment themes and implementation of strategies all take place inside one fund. The STANLIB Balanced Cautious Fund invests in a range of equities, property, bonds and cash that are selected within the mandate of the fund to optimise returns while reducing risk and volatility.”

“Equities need to be included in an investment portfolio for long term growth but with volatility reaching record highs in 2008, a more stable approach to investing is necessary.”

As we draw towards the end of the February 2009 Tax Year many investors are turning their attention towards capitalising on the tax incentives offered by SARS. The STANLIB Balanced Cautious Fund is both an ideal, long-term fund to include in one’s retirement portfolio as well as being a Regulation 28 (Prudential Investment Guidelines) Compliant Fund and the management principles of the fund adhere to those recommended by Treasury. Retirement Annuities offer investors the benefits of 0% Retirement Fund Tax, so all growth, interest or revenue earned within the STANLIB Balanced Cautious Fund is tax-free if invested in through a Retirement Annuity.

As a major unit trust company in the country, Maphumulo says it is important to offer investors funds that will not only meet their investment objectives but whose mandates and returns they feel comfortable with from day one.

The new STANLIB Balanced Cautious Fund has an upper limit of 40% domestic equity investments, including property.

“At STANLIB we have expert investment professionals in all our investment franchises and the fund will draw on this expertise to select the best and most appropriate investments in each asset class as well as the optimal asset allocation within the existing market conditions to maximise returns. The STANLIB Balanced Cautious Fund will be a collective effort of some of the best investment minds in the country,” says Maphumulo.

The minimum investment in the STANLIB Balanced Cautious Fund is a R2000 Lump sum or R200 a month debit order. The Fund will pay a quarterly distribution.

If accessed through a retirement annuity the minimum maybe higher and is determined by the RA product provider.

For both forms of investment, future additional investments are permitted into the same investment contract, and the monthly debit order can be altered or stopped at any time without incurring a penalty.