I recently went to the supermarket to buy washing powder. Great was my surprise when I stood before the shelf and saw that there are literally dozens of makes and types of washing powder, each extolling their great virtues. Some in powder form, others in liquid form, some for colours, others claiming to clean your white stuff like new, etc, etc. In the end I called my wife and without missing a beat, she selected the right product for our needs. A bit of experience goes a long way and I imagine this is pretty much what potential investors feel like when they have to choose a unit trust.
Long-term investments may seem complicated to investors with over a thousand unit trusts of varying types and attributes available to invest in. Some local, some global, equity funds, property funds, income funds and virtually any combination of these. Making a selection is a daunting task to the man in the street, but like the washing powders, very easy if you have someone knowledgeable to assist you.
For this reason, we have made investments simple by narrowing down the choice to only four funds. You can choose between a conservative, a moderate and an aggressive fund, each fund designed for long-term investors with a specific risk profile in mind. Alternatively, if you want protection against the weakness of the ZAR or you want to diversify the country risk in your portfolio, our global fund is a simple and effective solution.
Determine your level of risk
You start by determining the level of risk you want to be exposed to. The level of risk in a fund is typically described as the volatility of the returns, but in layman’s terms, this just gives you an indication of the probability of making a capital loss if you had to sell your investment unexpectedly. A low-risk fund generally has very stable returns with a low risk of making capital losses, while a high-risk fund has more cyclicality in its returns. While it could potentially deliver higher returns over time than a low-risk fund, the value of your investment could fluctuate more. You must determine what your investment horizon is and what level of volatility in the value of your investment you would be comfortable with.
You only have to consider these four funds for a long-term investment:
1. Low risk
The Sharenet BCI Conservative FoF is a low-risk balanced fund for cautious investors. The fund provides the investor with income while preserving capital against inflation and there is a low risk of sustaining a capital loss. The returns of this fund are stable with small fluctuations, giving you peace of mind.
2. Medium risk
The Sharenet BCI Moderate FoF aims to provide the investor with income and inflation-beating capital growth. The fund holds a greater proportion of growth assets, like equity and property, than the Conservative fund, giving you a higher potential growth over time, but also more variability in its returns. Investors in the Moderate fund are typically looking for a balanced portfolio with a low probability of sustaining losses over the next three years. If you were standing in front of the washing powder shelf and you had a moderate profile, you would just go with the same brand you have been using for years. You know it might not be the most exciting brand, but it’s certainly reliable!
3. High risk
The Sharenet BCI Aggressive FoF is for the investor who wants to grow wealth over the longer term. I often advise young people to start investing regularly in this type of balanced fund. This investment should grow and allow you to buy a house or a car and even to make provision for your retirement one day. Also, the funds are available on two to three days’ notice, so you can always access it in an emergency. The bulk of the fund’s assets consist of growth assets like equity and property, while there also is a good local and offshore split across multiple asset classes diversifying your risk.
The Sharenet BCI Global Balanced FoF is our global offering and provides a straightforward way for you to invest in foreign markets. You don’t need forex approval to invest in this fund. The fund invests in equities, property and income assets in foreign markets and the risk is diversified by spreading the investment across these asset classes and over different countries. Sharenet selects the top offshore managers with proven skills in picking the best stocks and identifying countries and regions with the most attractive growth prospects. We combine this with very low cost tracker funds and ETFs (exchange traded funds) which are very easy and cost efficient to trade. We live in a country with a very uncertain political and economic environment, and this fund is suitable for investors with a moderate to aggressive risk profile, looking to move some of their wealth offshore to give them good growth and peace of mind.
Sharenet’s Fund of Funds approach
The Sharenet investment team has built up a great track record managing their Fund of Funds range, and you can rely on our team to use our asset allocation skills to implement the best investment views across all asset classes. The range also utilises a multi-manager approach where we select the best fund managers on the different asset classes like Allan Gray, Coronation, Nedgroup, Abax, Prescient, Fairtree, Anchor Capital, Sygnia and Sharenet Investments. Some of these are experts at picking stocks and identifying current economic trends in the market, others at managing income funds. We also use low-cost trackers and exchange traded funds (ETFs), allowing us to actively manage the asset allocation of the funds, while at the same time offering very affordable funds to our investors. You can read more about our approach here.
Start building your wealth now
There is an old saying is that the best time to plant a tree is twenty years ago. The second-best time is NOW.
We have made it easy to invest by following our step-by-step process. There are no financial advisor fees, transaction costs or any other hidden fees.
1. Download the application form here.
It’s easy to fill out the form and shouldn’t take more than a few minutes. Sharenet staff are on hand to help you through the process.
2. Email the application form and FICA documentation that is specified on the form to firstname.lastname@example.org
For individuals, the FICA documents are a certified copy of ID and proof of address.
3. Sharenet will contact you with details on how to make a contribution to your investment once your account is open.
Still not sure where to invest?
If you have a question about how the investments work or you need help in choosing a fund, our friendly staff are standing by to help you. Click here and we’ll call you back!
Feel free to visit our UT Labs page where you can learn more about the basics of unit trust investments. You can also find us at www.sharenetinvestments.co.za
You can also find out more about the benefits of investing in fund of funds here.
Chief Investment Officer
Kobus Louw hails from Port Elizabeth where he completed his B.Sc Hons degree, before graduating from Stellenbosch University with an MBA in 1988. He began his career in the actuarial division at Sanlam, later moving to the investment department. After a two-year period working at Unicorn Lines in Durban from 1979-80, Kobus helped to set up and manage an investment information systems department at Sanlam, after which he moved to the field of portfolio management at Sanlam Investment Management, eventually becoming head of Portfolio Management in 1998. In 1999, Kobus joined Cadiz Asset Management as one of its founding members in charge of new product development initiatives and the refocusing of the active management team’s efforts. Kobus resigned from his position as Director and Chief Investment Officer at the end of 2004 and took up the CIO role at Contego Asset Management, focussing on the investment process and developing new offerings until 2016 when he joined Sharenet.