Rezco launches Flexible Prudential Fund
Rezco, well known for the performance of its Value Trend Fund, will be expanding with the launch on 2 August of its second fund, the Rezco Prudential Fund.
The new fund, which will be classified in the Domestic Allocation - Prudential Variable Equity Fund category, will target both the institutional pension fund sector as well as retail retirement funding investors. It will be distributed via intermediaries (largely through institutional platforms), by Linked Investment Service Providers (LISPs), pensions and retirement funds, to retail investors and to unitholders in the existing Value Trend fund.
The new fund meets the legislated and regulatory requirements for pension funds, with a maximum of 75% of the fund being held in equities and the balance in liquid assets. As with other funds, 15% of assets can be held offshore.
Wally Gray, Rezco’s South African-based asset manager comments, “We have chosen the Prudential Sector as our first expansionary move in view of the scope and importance of the retirement fund industry. Our existing Value Trend fund is more growth orientated and targeted at high net worth individuals. With the launch of the Prudential fund, we now have a product which meets the requirements of the retirement market and appeals both to institutional retirement funds and the more risk averse individual investor.”
Gray says Rezco will follow a similar philosophy and style to that employed in the Rezco Value Trend fund, being fully flexible in adapting to market conditions but at the same time implementing a more conservative strategy, given the 75% maximum equity restriction.
“At Rezco we believe we are paid to actively manage client funds and to produce the benefits of a flexible approach over time. Our team combines top- down macro economic analysis with bottom-up micro analysis of individual stocks. This approach has offered unique diversity to investors building a portfolio of funds and we have achieved attractive growth since inception, while maintaining a secure risk profile,” he says.
Rezco Prudential will aim to provide inflation-beating returns but with reduced risk and volatility. “While the constraints of a prudential fund are more rigorous than in a high equity mandate, we are confident of achieving superior long term performance as in the case of Rezco Value Trend,” says Gray.
Rezco’s US-based asset manager, Rob Spanjaard endorses this view, “There is a growing demand for risk controlled investing globally in the wake of the international financial crisis. We have proven ourselves in this arena and believe it will transfer as effectively into the retirement environment. Our job is to manage the risk, reduce volatility and still achieve attractive positive returns,” he says.
The historic performance of the Value Trend Fund, adjusted for a more conservative prudential mandate, would still have produced an attractive total return of 167% since inception, compared to the actual Value Trend return for that period of 183%.
In the current uncertain economic and market environment, Rezco has taken action to protect the Value Trend fund from an anticipated market downturn in the second half of the year. The portfolio cash content has been increased to almost 60%, with the balance in a spread of defensive growth stocks.
Rezco’s strategy has been to build cash resources to take advantage of emerging opportunities and to create a platform for market recovery in 2012 onwards.
The Rezco view is that there is still considerable fragility in the global economy and although company earnings are currently looking positive, caution is called for in the short term – conditions highlight the importance of a flexible asset allocation strategy.
Global markets have benefitted significantly over the past year from the trillions of dollars injected by governments to revive their economies. “However there are still ‘icebergs’ lurking beneath the surface as is evident from austerity measures being introduced across Europe - hence the need for a cautious approach currently,” concludes Spanjaard.
