STANLIB's R1bn Fund Focus success just the start

STANLIB's announcement that its single manager risk-profiled Fund Focus range has topped the R1 billion-mark sets the scene for new success by investment advisers, according to Kim Zietsman, head of STANLIB single-manager unit trusts.

Zietsman says advisers can add further value to a proven winner by alerting clients to opportunities for enhanced wealth-creation by making use of the best risk diversifier of all time.

South Africas largest unit trust company introduced its risk-profiled range in August 2005 in response to the FICA challenge. The range offers a pre-packaged solution to the Acts 'best advice' requirements.

Five products are available with different risk profiles- conservative, moderately conservative, moderate, moderately aggressive and aggressive. Adviser and client establish the profile. STANLIBs investment professionals create the requisite asset mix.

Time-consuming portfolio adjustment by the adviser and client become a thing of the past. STANLIB rebalances equity, property, bonds and cash allocations in line with the risk-related mandate.

Now the concept has bedded in, new sales opportunities are emerging thanks to the ranges ability to act as a market trend barometer.

Kim Zietsman explains: "R1 billion in assets across the range is solid proof of concept. Greatest penetration has been achieved by relatively low-risk structures. Moderately aggressive and aggressive profiles account for only 14% of sales. The average investor obviously has an inordinate fear of short-term loss.

"Yet higher-risk products with higher equity weightings achieve the greatest gains over time. New sales success awaits advisers who alert clients to this opportunity and the technique of using time in the market as your best risk diversifier."

Now the once-novel product has an established track-record, clients may want to know which of the five options works best and why.

Zietsman adds: "Most of the current upside is driven by STANLIB specialist expertise in sectors such as listed property and single-minded equity funds like resources, growth and small caps.

"These equity franchises are delivering the added value previously associated with specialist investment boutiques yet are backed by the extensive infrastructure of a major industry player.

"Over the entire life of the risk-profiled range, the bigger the equity allocation, the bigger the gains; it wont always be this way, the market will change, but the client with time on his side can ride out the storm and still achieve solid growth."

Market feedback indicates that the range's key consumer-friendly features are:

* Built-in expertise and flexibility
* Reasonable fees for a high-advice, knowledge-based product
* Cost efficiency as the fund-of-funds structure avoids switching costs
* Tax efficiency as periodic adjustments within the product do not constitute a Capital Gains Tax event.

Zietsman notes: "This newcomer has won market-share by strong emphasis on its smart structure. In future, attention may shift to getting the most out of this proven design. That means stronger emphasis on time as a risk-diversification tool and a commitment to higher equity allocations."